USD/CHF falls, EUR/USD rises as weak US data shifts Fed expectations

USD/CHF dropped 0.5% to 0.8675 while EUR/USD surged 0.6% to 1.0920 as disappointing US economic data prompted traders to reassess Federal Reserve policy expectations. Recent US manufacturing data came in weaker than anticipated, with ISM PMI falling to 47.8, indicating continued contraction. Additionally, dovish signals from Fed officials suggested a potential pause in the tightening cycle, weighing heavily on dollar sentiment. The US Dollar Index declined 0.7% to 103.20, marking its sharpest daily drop in three weeks. Technical indicators show USD/CHF breaking below the 0.8700 support level, with next target at 0.8650, while EUR/USD cleared resistance at 1.0900 and could test 1.0950. Traders are now positioning for potentially softer Fed rhetoric at upcoming meetings, which could further pressure the greenback against major counterparts.