During the Thursday (03/4) session, the USD/CHF pair experienced a sharp decline, falling to the 0.8600 region and marking its weakest level in almost six months. The bearish move came amid a broad-based US dollar weakness following President Donald Trump's aggressive announcement of reciprocal import tariffs. The US Dollar Index (DXY) took a heavy hit, falling decisively as traders fled US assets and reallocated portfolios away from the Greenback. Meanwhile, oversold signals from momentum indicators suggest the pair may be poised for a comeback.

Tariff shock hits US dollar

President Trump's unveiling of a 10% base tariff on all incoming goods, along with a 25% levy on auto imports, came as a major surprise to global markets. While initially welcomed for its clarity, the tariff measures turned out to be highly complex and country-specific, adding uncertainty to trade dynamics. Investors quickly reassessed the risks, leading to an exodus from US equities and the US dollar.

The ripple effect was seen across markets, with the DXY dropping below 102 for the first time in months. US jobless claims added to the soft tone, coming in at 219K—below estimates and a revised 225K, indicating continued labor market weakness. Meanwhile, the ISM Services PMI for March disappointed at 50.8, missing expectations and indicating slower growth momentum. Combined with growing recession fears, this mix of data reinforces the idea that the Fed may need to make changes sooner than previously thought. (Newsmaker23)

Source: FXstreet