USD/CHF struggles to justify latest recovery as risk-tone remains heavy

• The USD/CHF pair looks for more USD strength to counter risk aversion.
• Trade headlines have been downbeat off-late, Brexit uncertainty prevails.

With the recently rising trade pessimism exerting downside pressure on the USD/CHF pair, the quote fails to hold on to recovery gains while trading near 0.9900 during early Wednesday.

Although news from Turkey signals receding geopolitical tension in the Middle East, uncertainty surrounding the US-China trade deal and Brexit, coupled with an absence of USD positive catalysts, stop the USD/CHF buyers after dominating the pair momentum since the week’s start.

The US Department of Commerce recently proposed an investigation into China’s exports of aluminum wires and cables and the same could weigh on the trading sentiment after the latest run of upbeat expectations from a likely November month negotiation round between the two global superpowers, namely the United States (US) and China.

With this, the US 10-year Treasury yield weakens further below 1.80% to 1.75% by the press time.

Following upbeat comments that the US and China are close to a trade deal by the respective diplomats, markets’ risk-on sentiment strengthened, which in turn negatively affected the Swiss Franc (CHF) due to its safe-haven status.

Also exerting the downside pressure was the US Dollar (USD) strength backed by upbeat manufacturing data.

Looking forward, an absence of major data/events on the economic calendar will keep pushing traders to search for the qualitative catalysts to forecast near-term pair direction.

Technical Analysis

The pair needs a successful rise beyond early-month low surrounding 0.9905 in order to challenge a 200-day Simple Moving Average (SMA) level of 0.9957, failing to which could drag it back to recent low close to 0.9837.