USD/CHF stages a modest recovery from 3-week lows, holds above mid-0.9600s

• A goodish pickup in the USD demand assisted USD/CHF to gain some traction on Thursday.
• The upside seemed limited amid softer risk sentiment and worsening US-China relations.
• Investors now look forward to the US macro releases for some short-term trading impetus.

The USD/CHF pair edged higher through the early European session and was last seen trading near the top end of its daily trading range, around the 0.9665 region.

The pair managed to regain some positive traction on Thursday and recovered a part of the previous day’s sharp fall to near three-week lows. The uptick was supported by a stronger US dollar, albeit the softer risk tone kept a lid on any strong gains for the USD/CHF pair.

As investors digested Wednesday’s dovish sounding FOMC meeting minutes, the greenback attracted some dip-buying on Thursday and recovered a part of its recent losses. A modest pickup in the USD demand was seen as one of the key factors lending some support to the major.

Meanwhile, concerns about worsening US-China relations weighed on investors’ sentiment. This was evident from a weaker trading action around the global equity markets, which extended some support to the Swiss franc’s perceived safe-haven status and capped the upside.

From a technical perspective, the overnight break below the 0.9700 mark and a subsequent fall below 50-day SMA might have shifted the near-term bias back in favour of bears. However, it will be prudent to wait for some follow-through selling before placing fresh bearish bets.

Moving ahead, market participants now look forward to the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI from the US. The US macro data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch