USD/CHF bounces off lows, still in the red below 0.9900 handle

• Growing US-China trade pessimism continued benefitting the CHF’s safe-haven status.
• Sliding US bond yields kept the USD bulls on the defensive and added to the selling bias.
• Investors now eye Powell’s second day of testimony, Fedspeaks for a fresh impetus.

The USD/CHF pair maintained its offered bias through the mid-European session, albeit has managed to recover a part of its early lost ground to 1-1/2 week lows.
 
The pair extended its recent pullback from levels beyond the very important 200-day SMA and witnessed some follow-through selling for the fourth consecutive session on Thursday. The prevalent risk-off mood continued benefitting traditional safe-haven currencies – including the Swiss franc – and was seen as one of the key factors exerting pressure on the major.

Focus remains on trade developments

Reports that the US-China trade talks have hit a snag on Chinese purchases of US farm products added to the recent pessimism and continued weighing on investors’ appetite for perceived riskier assets. The flight to safety was reinforced by a sharp fall in the US Treasury bond yields, which kept the US Dollar bulls on the defensive and further collaborated to the pair’s downfall.
 
The pair touched an intraday low level of 0.9870 but managed to find some support at lower levels after China’s customs announced that they will be removing restrictions on the import of poultry meat from the United States, effective immediately.
 
However, the fact that the decision was already announced after the recent face-to-face trade talks allowed markets to ignore the headlines and thus, warrant some caution before positioning for any further recovery amid absent relevant market moving economic releases.
 
Moving ahead, the Fed Chair Jerome Powell’s second day of testimony, followed by scheduled speeches by influential FOMC members might play a key role in influencing the USD price dynamics and eventually assist traders to grab some short-term opportunities.

Technical levels to watch