USD/CHF clings to gains above 0.9700 mark, moves further away from 3-week lows

• USD/CHF edged higher for the second straight session amid a pickup in the USD demand.
• Weaker risk sentiment benefitted the safe-haven CHF and kept a lid on any strong gains.
• Bulls are likely to wait for some strong follow-through buying before placing fresh bets.

The USD/CHF pair built on the previous day’s goodish recovery move from near three-week lows and gained some traction for the second straight session on Friday. The pair held comfortably above the 0.9700 mark through the early European session, albeit lacked any strong follow-through buying.

The US dollar was back in demand amid worsening US-China relations and was seen as one of the key factors behind the pair uptick on the last trading day of the week. China’s decision to impose new Hong Kong security law added to market concerns about a further escalation in US-China tensions.

The US President Donald Trump was quick to respond and said that the US will react strongly if China imposes the law. This comes on the back of the recent development, where in the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges.

Worsening US-China relations took its toll on the global risk sentiment and the same was evident from a fresh leg down in the global equity markets. The downbeat market mood extended some support to the Swiss franc’s safe-haven status and might keep a lid on any strong gains for the USD/CHF pair.

The pair has now recovered its weekly losses, though it remains to be seen if bulls are able to capitalize on the move amid absent relevant market moving economic releases. Given that the pair has repeatedly faced rejection near the very important 200-day SMA, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move.

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