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  • USD/CHF extended this week’s rejection slide from the very important 200-DMA.
  • Sustained USD selling, deteriorating risk sentiment exerted some heavy pressure.
  • Weakness below 0.9600 mark will pave the way for a further near-term downfall.

The USD/CHF pair continued losing ground through the early part of European trading action and dropped to over two-week lows, around the 0.9615 area in the last hour.

Having repeatedly faced rejection near the very important 200-day SMA, around the 0.9800 mark, the pair on Thursday witnessed some aggressive long-unwinding trade and was being weighed down by sustained US dollar selling bias.

The greenback remained depressed in the wake of this week’s awful US GDP report/dovish FOMC and was further pressured by a goodish pickup in the shared currency. Broad-based USD weakness was seen as a key factor exerting pressure on the pair.

Adding to this, a weaker risk sentiment, as depicted by a sea of red across the global equity markets, underpinned the Swiss franc’s safe-haven demand. This, in turn, collaborated the pair’s offered tone for the third consecutive session on Friday.

Apart from this, the downfall could further be attributed to some follow-through technical selling. This comes on the back of the overnight breakthrough a one-week-old trading range and a subsequent fall below the 100-day SMA, near the 0.9600 mark.

The pair has now retreated back closer to important support near the 0.9610-0.9600 region. Failure to defend the mentioned support will confirm that the pair might have already topped out and set the stage for a further near-term depreciating move.

Market participants now look forward to the US economic docket, highlighting the release of the ISM Manufacturing PMI. This along with the broader market risk sentiment will influence the pair’s momentum and produce some short-term trading opportunities.

Technical levels to watch