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  • USD/CHF lacked any firm directional bias and remained confined in a range on Tuesday.
  • The upbeat market mood undermined the safe-haven CHF and extended some support.
  • Sustained USD selling bias capped the upside ahead of the US ISM PMI and Fedspeak.

The USD/CHF pair seesawed between tepid gains/minor losses and remained below the key 0.9000 psychological mark through the mid-European session.

A combination of diverging forces failed to provide any meaningful impetus to the major and led to a subdued/range-bound price action through the first half of the trading action on Tuesday. The prevalent risk-on environment, as depicted by a relentless rally in the global equity markets, undermined the safe-haven Swiss franc. This, in turn, was seen as a key factor that helped limit the downside for the USD/CHF pair.

The supporting factor, to a larger extent, was offset by sustained US dollar selling bias. The USD languished near multi-month lows amid dovish Fed expectations, with bulls shrugging off a goodish pickup in the US Treasury bond yields. Investors now seem aligned with the Fed’s stubbornly dovish view that any spike in prices would be temporary and have been scaling back their bets for an earlier than expected Fed lift-off.

This acted as a headwind for the USD/CHF pair. Even from a technical perspective, the pair’s inability to capitalize on its recent bounce from over three-month lows suggests that the near-term bearish trend might still be far from being over. Hence, any meaningful recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

Market participants now look forward to the release of the US ISM Manufacturing PMI for a fresh impetus. Apart from this, scheduled Fed Vice Chair Randal Quarles and Governor Lael Brainard would further influence the USD price dynamics. This, along with the broader market risk sentiment might contribute to produce some meaningful trading opportunities around the USD/CHF pair.

Technical levels to watch