USD/CHF struggles near the lowest since January 2015, around 0.8875-70 region

• USD/CHF witnessed some follow-through selling for the third consecutive session on Wednesday.
• Hopes for more US fiscal stimulus continued weighing on the USD and was seen exerting pressure.
• The risk-on mood, amid COVID-19 vaccine optimism, did little to lend any support to the major.

The USD/CHF pair remained depressed through the early European session and dropped to fresh multi-year lows, around the 0.8870 region in the last hour.

The pair prolonged its recent bearish trajectory and witnessed some follow-through selling for the third consecutive session on Wednesday. The downfall also marked the sixth day of a negative move in the previous seven and was exclusively sponsored by sustained US dollar selling bias.

Growing confidence surrounding the US fiscal stimulus was seen as one of the key factors that continued exerting some downward pressure on the greenback. Even a modest pickup in the US Treasury bond yields failed to provide any respite to the USD bulls or lend any support to the major.

Meanwhile, the ongoing fall to the lowest level since January 2015 seemed rather unaffected by the prevalent risk-on mood, which tends to undermine the safe-haven Swiss franc. The global risk sentiment remained well supported by the positive news on vaccines for the highly contagious COVID-19.

Britain on Tuesday became the first Western nation to begin a vaccination campaign. Separately, the US Food and Drug Administration (FDA) released documents flagging no new safety or efficacy concerns over the Pfizer/BioNTech vaccine, implying that it will be approved for use in the US soon.

However, extremely oversold conditions on short-term charts might hold traders from placing fresh bearish bets and help limit deeper losses for the USD/CHF pair, at least for the time being. That said, any meaningful short-covering bounce might still be seen as a selling opportunity.

In the absence of any major market-moving economic releases from the US, the incoming US stimulus headlines will play a dominant role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment will also be looked upon for some short-term trading opportunities.

Technical levels to watch