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  • USD/CHF struggled for a firm direction and remains in a four-day-old trading range.
  • Worsening US-China relations benefitted the safe-haven CHF and capped the upside.
  • Resurgent USD demand helped limit any deeper losses, at least for the time being.

The USD/CHF pair extended its sideways consolidative price action on Thursday and remained confined in a narrow trading band, just above the 0.9600 mark.

A combination of diverging forces failed to provide any meaningful impetus to the USD/CHF pair and led to a subdued/range-bound trading action through the early European session on Thursday. The pair struggled to register any meaningful recovery from over two-month lows set on Tuesday, albeit has been showing some resilience below the 0.9600 round-figure mark.

The US suspended Chinese airlines passenger flights to and from the US with effect from June 16. The move came after the dragon nation earlier barred American carriers from re-entering China and fueled fears about a further escalation in tensions between the world’s two largest economies.

The latest developments further kept a lid on the recent optimism over a sharp V-shaped global economic recovery from the coronavirus pandemic. This, in turn, benefitted the Swiss franc’s relative safe-haven status and capped the upside for the USD/CHF pair. However, a goodish pickup in the US dollar demand helped limit any meaningful slide, at least for now.

The greenback was back in demand on Thursday and allowed the key USD Index to stage a notable bounce from the lowest level since mid-March. Resurgent USD demand was seen as one of the key factors that held investors from placing any aggressive directional bets and held the USD/CHF pair well within a four-day-old trading range.

From a technical perspective, the pair’s inability to gain any meaningful traction indicates that the near-term selling bias might still be far from being over. However, bearish traders are likely to wait for some follow-through selling, possibly below the 0.9575-70 region, before confirming a breakdown and positioning for any further near-term depreciating move.

Technical levels to watch