USD/CHF clings to modest recovery gains, above mid-0.9400s

• USD/CHF gains traction on Friday and recovers further from over one-week lows.
• The upbeat market mood undermined the safe-haven CHF and remained supportive.
• Concerns about rising COVID-19 cases/sustained USD selling might cap the upside.

The USD/CHF pair held on to its modest daily gains through the early half of Friday’s trading action and was last seen trading near session tops, around the 0.9465 region.

The pair built on the previous day’s late bounce from over one-week tops and gained some positive traction on the last trading day of the week, snapping three consecutive days of losing streak. The prevalent risk-on environment undermined demand for the perceived safe-haven Swiss franc and was seen as one of the key factors behind the USD/CHF pair’s modest uptick.

The global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease reviving hopes of a V-shaped global economic recovery. In fact, the incoming positive economic data, including Thursday’s US NFP report, provided further evidence that the worse of the coronavirus pandemic was probably over.

However, growing market concerns that a continuous surge in new COVID-19 cases globally could trigger renewed lockdown measures to contain the spread held investors from taking excessive risk. This coupled with sustained selling around the US dollar might keep a lid on any strong gains for the USD/CHF pair, warranting some caution before positioning for any further gains.

Apart from this, traders might also refrain from placing aggressive bets amid relatively thin liquidity conditions on the back of the Independence Day holiday in the US. Hence, any subsequent positive move is more likely to remain capped, rather fizzle out near the key 0.9500 psychological mark.

Technical levels to watch