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  • A combination of factors failed to assist USD/CHF to capitalize on its modest intraday uptick.
  • Dovish Fed expectations, sliding US bond yields undermined the USD and exerted pressure.
  • A softer risk tone benefitted the safe-haven CHF and further contributed to the selling bias.

The USD/CHF pair struggled to preserve its modest intraday gains and was last seen trading near session lows, just above the key 0.9000 psychological mark.

As investors looked past Friday’s disappointing US Retail Sales report, the US dollar edged higher on the first day of a new trading week and extended some support to the USD/CHF pair. However, dovish Fed expectations held the USD bulls from placing aggressive bets and kept a lid on any meaningful upside for the major.

Apart from this, a softer tone around the equity markets underpinned the safe-haven Swiss franc and prompted some fresh selling around the USD/CHF pair. The flight to safety was reaffirmed by the ongoing decline in the US Treasury bond yields, which was seen as another factor that acted as a headwind for the USD.

Meanwhile, the downside remains cushioned, at least for the time being, warranting some caution for bearish traders. Hence, it will be prudent to wait for some follow-through selling below the 0.9000 mark before positioning for any further depreciating move amid absent relevant market moving economic releases from the US.

A sustained break below the mentioned handle will set the stage for an extension of the recent sharp pullback from the 0.9470-75 region, or nine-month tops touched in April. The USD/CHF pair might then accelerate the fall towards intermediate support near the 0.8940 region before eventually dropping to the 0.8900 round figure.

Technical levels to watch

 

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