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  • USD/CHF failed to capitalize on the attempted bounce to the 0.9600 neighbourhood.
  • The ongoing slump in the USD weighed on the USD and prompted some fresh selling.
  • Receding safe-haven demand undermined the CHF and helped limit deeper losses.

The USD/CHF pair quickly retreated around 55-60 pips in the last hour and dropped back closer to near two-year lows set on Tuesday.

The pair failed to capitalize on its early uptick and met with some fresh supply near the 0.9600 round figure mark amid some renewed US dollar weakness since the early European session. The greenback struggled to preserve its early modest gains and continues to be weighed down by the ongoing slump in the US Treasury bond yields to fresh all-time lows.

USD weighed down by record-low US bond yields

Against the backdrop of the Fed’s surprise move on Tuesday to cut interest rates by 50 bps, the yield on the benchmark 10-year US government bond dropped below the 1% and turned out to be one of the key factors that held the USD bulls from placing any aggressive bets.

Despite the latest leg of a sudden fall, a strong bullish sentiment surrounding equity markets undermined the Swiss Franc’s perceived safe-haven demand and might help limit the downside, at least for the time being. Moving ahead, market participants now look forward to the US economic releases for a fresh impetus.

Wednesday’s US economic docket highlights the release of the ADP report on private-sector employment. This will be followed by the ISM Non-Manufacturing PMI, which might influence the USD price dynamics and produce some short-term trading opportunities later during the early North-American session.

Technical levels to watch