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  • USD/CHF struggled to capitalize on its early modest gains to three-day tops.
  • A subdued USD price action was seen as a key factor capping gains for the pair.
  • Fading safe-haven demand undermined the CHF and helped limit deeper losses.

The USD/CHF pair surrendered early modest gains to three-day tops and has now retreated to the lower end of its daily trading range, around the 0.9140-35 region.

The pair added to the previous day’s goodish rebound of around 70 pips from four-week lows and gained some follow-through traction through the first half of the trading action on Wednesday. Signs of stability in the equity markets undermined the safe-haven Swiss franc, which, in turn, was seen as a key factor driving the USD/CHF pair higher.

However, a softer tone surrounding the US dollar held bulls from placing any aggressive bets and kept a lid on any runaway rally. As investors looked past a setback in the development of a COVID-19 vaccine, fading hopes of any further US fiscal stimulus and the US political uncertainty held the USD bulls on the defensive.

Meanwhile, the downside remained cushioned and the USD/CHF pair, so far, has managed to hold above 50-day SMA support. This makes it prudent to wait for some strong follow-through selling before traders start positioning for the resumption of the recent downward trajectory witnessed over the past two weeks or so.

Market participants now look forward to the US economic docket, featuring the release of PPI figures. This, along with speeches by FOMC members, will influence the USD price dynamics. Apart from this, traders will further take cues from the broader market risk sentiment in order to grab some meaningful trading opportunities.

Technical levels to watch