• A slight deterioration in risk sentiment underpins CHF’s safe-haven demand.
• A modest USD uptick lacks strong follow-through amid dovish Fed expectations.
• Focus remains on the latest FOMC monetary policy update and economic projections.
The USD/CHF pair struggled to register any meaningful recovery and held within striking distance of two-week lows, set in the previous session.
The pair failed to capitalize on the early attempted rebound and remained on the defensive for the fourth consecutive session – also marking its sixth down day in the previous seven, amid resurfacing US-China trade tensions.
Overnight reports suggested a lack of progress in the US-China trade negotiations and lead to a slight deterioration in risk sentiment, which boosted the Swiss Franc’s safe-haven demand and exerted some downward pressure.
Meanwhile, a modest US Dollar bounce lacked any strong bullish conviction amid firming market expectations that the Fed might opt for a more accommodative stance and further collaborated towards keeping a lid on the pair’s uptick.
The downside, however, remained cushioned as investors now seemed reluctant to place any aggressive bets ahead of the latest FOMC monetary policy update, scheduled to be announced later during the US trading session.
Even from a technical perspective, traders are likely to wait for a convincing break below 100-day SMA support, currently near the 0.9975 region, before aggressive positioning for any further near-term bearish slide.
Technical levels to watch
Below the mentioned support, the pair is likely to accelerate the slide towards late-Feb. swing lows, around the 0.9925 region, before eventually dropping to challenge the 0.9900 handle. On the flip side, the 1.0010-15 region might continue to act as an immediate resistance, which if cleared might prompt a near-term short-covering bounce towards 1.0040-45 intermediate resistance en-route 1.0070-80 supply zone.