USD/CHF stages a modest recovery from two-week lows, lacks follow-through

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  • A modest USD rebound assisted USD/CHF pair to rebound from two-week lows.
  • Reviving safe-haven demand might benefit the CHF and cap any further upside.
  • Holiday-thinned liquidity might further hold traders from placing aggressive bets.

The USD/CHF pair built on its intraday bounce from over two-week lows and climbed to fresh session tops in the last hour, with bulls now eyeing to reclaim the 0.9100 mark.

The pair managed to find some support near the 0.9065 region and for now, seems to have stalled its recent downfall from the vicinity of the 0.9200 round-figure mark. The US dollar staged a modest recovery from the lowest level in over two months and was seen as one of the key factors behind the USD/CHF pair’s intraday move up.

Meanwhile, the market seemed to have digested the optimism over a potential COVID-19 vaccine. This, in turn, prompted investors to take some profits off the table following the recent strong bullish run-up in the equity markets, which extended some support to the Swiss franc’s safe-haven status and might cap the upside for the USD/CHF pair.

Moreover, the USD uptick lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly amid holiday-thinned liquidity conditions. The US markets are closed on Thursday in observance of Thanksgiving Day. This makes it prudent to wait for some follow-through buying before positioning for any further appreciating move.

Hence, any subsequent strength towards the 0.9115 area is more likely to be seen as a selling opportunity and remain capped near the 0.9140-50 supply zone. That said, a sustained strength beyond might trigger some near-term short-covering move and assist the USD/CHF pair to aim back towards reclaiming the 0.9200 round-figure mark.

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