“¢ Weaker US bond yields prompt some USD weakness.
“¢ Cautious mood underpins CHF and adds to a mild selling bias.
The USD/CHF pair traded with a mild negative bias on Tuesday and has now reversed previous session’s modest uptick.
A modest retracement in the US Treasury bond yields kept the US Dollar bulls on the defensive through the early European session on Wednesday. This coupled with a cautious mood around European equity markets extended some support to the Swiss Franc’s safe-haven appeal and exerted some downward pressure on the major.
Meanwhile, traders seemed to have largely ignored a sharp fall in the ZEW Swiss economic expectations index, coming in at -4 for June as compared to previous month’s reading of 8, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum ahead of a key meeting between the US President Donald Trump and European Commission President Jean-Claude Juncker.
Looking at the broader picture, the pair remains confined within a narrow trading range, held since the beginning of this week. Hence, it would be prudent to wait for a convincing breakthrough the mentioned band before positioning for the pair’s near-term trajectory amid absent fundamental drivers in terms of any major market moving economic releases.
Technical levels to watch
The 0.9900 handle might continue to act as an immediate support, which if broken is likely to accelerate the fall towards 0.9855 strong horizontal support. On the flip side, the 0.9945-55 region now seems to have emerged as an immediate hurdle, above which a bout of short-covering could lift the pair back towards its next major supply zone near the parity mark.
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