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  • Risk-on flows dominate the market action in the American session.
  • 10-year United States (US) Treasury bond yield gains nearly 4%.
  • US Dollar Index struggles to recover its losses.

The broad-based selling pressure surrounding the Greenback dragged the USD/CHF pair toward the 99 area during the European trading hours. However, with the market sentiment recovering in the last hours, the pair erased its daily losses and was last seen trading at 0.9955, where it was virtually unchanged on a daily basis.

Markets continue to react to US-China trade developments

While market participants are waiting for the headlines that will come out of the high-level trade negotiations between the United States (US) and China in Washington, some recent developments revived the optimism and caused safe-haven assets to lose interest.

An official from the US Chamber of Commerce in the last hour said there was a possibility of a currency agreement in the US-China trade talks in exchange for a delay in tariff hikes. Additionally,  Chinese Vice Premier Liu He repeated that China was willing to reach an agreement “on matters that both sides care about.”

Reflecting the upbeat market mood, the 10-year US Treasury bond yield rose sharply and was last up 3.7% on the day.  

On the other hand, the US Dollar Index struggled to stage a recovery despite the fact that the US Bureau of Labor Statistics’ inflation report showed that the core Consumer Price Index (CPI) in September stayed unchanged at 2.4% as expected. At the moment, the index is down 0.34% on the day, not allowing the pair to push higher.

Technical levels to watch for