USD/CHF drops to fresh 23-month lows near 0.9500 on shock Fed rate cut

• Fed cuts policy rate by 50 basis points in response to coronavirus.
• US Dollar Index slumps to 97 area ahead of Chairman Powell's presser.

The USD/CHF pair fell sharply in the early trading hours of the American session and touched its lowest level since April of 2018 at 0.9519 after the Fed decided to cut its policy rate by 50 basis points. Following the initial reaction, the pair recovered modestly and was last seen trading at 0.9540, erasing 0.52% on the day.

Eyes on FOMC Chairman Powell

Earlier in the day, the G7 statement refrained from mentioning a coordinated monetary policy move to counter the negative impact of the coronavirus outbreak on the global economy. However, the FOMC, in a shocking move, voted unanimously to lower the policy rate to 1%-1.25% target range after an emergency meeting on Tuesday.

"The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity," the Fed acknowledged in its statement.

The US Dollar Index (DXY) fell sharply and tested the 97 handle to reflect a broad-based selling pressure surrounding the greenback. At the moment, the index is down 0.45% on the day at 97.07.

Focus now shifts to FOMC Chairman Jerome Powell's press conference at 1600 GMT.

Fed Press Conference: Chairman Jerome Powell speech live stream – March 3

Technical levels to watch for