- USD/CHF corrects from YTD tops amid some aggressive USD long-unwinding.
- Bulls seemed unimpressed by a strong recovery in the global equity markets.
The USD/CHF pair dropped to fresh session lows, below mid-0.9700s during the early European session, albeit managed to recover few pips thereafter.
The pair continued with its struggle to find acceptance above the very important 200-day SMA and failed near the 0.9900 round-figure mark on Monday. The pair stalled its recent strong positive momentum to YTD tops after the Fed announced unprecedented measures to buy unlimited amounts of Treasury bonds and mortgage-backed securities.
The extraordinary array of programs helped ease concerns over tightening liquidity. This was followed by reports that the US Senate and the Trump administration were close to reaching a bipartisan agreement on the massive coronavirus spending package. The developments weighed heavily on the US dollar and prompted some long-unwinding trade around the major.
Meanwhile, a strong recovery in the global risk sentiment, which tends to undermine the Swiss franc’s safe-haven demand, did little to impress bulls, albeit might help limit deeper losses, at least for the time being. Hence, it will be prudent to wait for some follow-through selling before traders start positioning for any further near-term corrective slide.
Moving ahead, Tuesday’s economic docket, highlighting the flash version of the US Manufacturing and Services PMI, will now be looked upon for some short-term trading impetus. The key focus, however, will remain on any fresh developments surrounding the coronavirus saga, which might continue to play a key role in influencing the broader market sentiment.
Technical levels to watch
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