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  • USD/CHF stages a modest recovery after falling to over two-month lows on Friday.
  • A modest USD rebound might have prompted some intraday short-covering move.
  • The upbeat market mood undermined the safe-haven CHF and remained supportive.
  • Friday’s key focus will remain on the closely watched US monthly jobs report – NFP.

The USD/CHF pair quickly reversed an early European session dip to over two-month tops and rallied around 35-40 pips in the last hour. The pair was last seen trading near the top end of its daily trading range, around the 0.9575-80 region, and has now recovered a part of the previous day’s losses.

The bearish pressure surrounding the US dollar remained unabated through the early part of trading action on the last day of the week. Sustained USD selling was seen as one of the key factors exerting some pressure on the pair. However, the upbeat market mood undermined the Swiss franc’s safe-haven demand and helped limit deeper losses for the USD/CHF pair, at least for the time being.

The global risk sentiment remained well supported by growing optimism over a sharp V-shaped global economic recovery from the coronavirus pandemic. Investors seemed rather unaffected by concerns about escalating US-China tensions. It is worth recalling that the US suspended passenger flights by Chinese airlines in response to the dragon nation’s move to bar American carriers from re-entering China.

Meanwhile, the latest leg of a sudden pick up over the past hour or so lacked any obvious catalyst and could be attributed to a modest intraday USD rebound. In the absence of any fresh fundamental catalyst, investors now seemed inclined to lighten their USD bearish bets amid some repositioning ahead of Friday’s release of the closely watched US monthly jobs report – popularly known as NFP.

The US economy is expected to have lost 8 million jobs in May and the unemployment rate is anticipated to have jumped to 19.8% on the back of coronavirus-induced lockdowns. The data will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the USD/CHF pair.

From a technical perspective, the pair on Thursday closed below the 0.9600 round-figure mark and confirmed a near-term bearish break through a two-month-old trading range. Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CHF pair might have bottomed out and placing any fresh bullish bets.

Technical levels to watch