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  • USD/CHF met with some fresh supply in the last hour amid some renewed USD weakness.
  • Worsening US-China relations benefitted the safe-haven CHF and added to the selling bias.
  • The recent rangebound price moves warrant some caution before placing directional bets.

The USD/CHF pair faded an intraday bullish spike to the 0.9745 region and dropped to fresh session lows in the last hour. The pair quickly retreated over 40 pips from the early North American swing high, with bears now looking to extend the slide further below the 0.9700 mark.

The US dollar gained some traction amid worsening US-China relations, especially after the US Commerce Department announced to bar Huawei from acquiring semiconductors and chipsets made using US software and technology. The USD uptick, however, lacked any strong follow-through, rather met with some fresh supply following the release of US monthly Retail Sales figures.

Data published by the US Census Bureau revealed that the headline US Retail Sales declined by 16.4% in April, worse than consensus estimates pointing to a 12% decline. Adding to this, sales excluding autos plunged 17.2% during the reported month and the closely watched Retail Sales Control Group also recorded a steep decline of 15.3%.

The USD turned sharply low in what could be termed as a late reaction to the awful data. This coupled with a fresh leg down in the equity markets, always on the back of growing fears about the second wave of the coronavirus infections and fading hopes for a quick global economic recovery, benefitted the Swiss franc’s relative safe-haven status.

The USD/CHF pair moved further away from one-week tops set in the previous session, albeit remained well within a familiar trading range held over the past two weeks or so. The range-bound trading action warrants some caution for aggressive traders, awaiting a fresh catalyst before positioning for the next leg of a directional move.

Technical levels to watch