USD/CHF trades with modest losses around 0.9160-55 area, seems vulnerable

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  • USD/CHF witnessed some selling on Thursday and snapped two days of the winning streak.
  • The USD remained depressed near multi-week lows amid diminishing odds for a Fed rate hike.
  • COVID-19 jitters benefitted the safe-haven CHF and further contributed to the intraday selling.

The USD/CHF pair remained depressed through the mid-European session and was last seen trading around the 0.9155-60 region, just a few pips above daily swing lows.

The pair failed to capitalize on this week’s recovery move from the 0.9130 region – the lowest level since early March – and came under some renewed selling pressure on Thursday. This marked the first day of a negative move in the previous three trading session and was sponsored by a combination of factors.

Renewed fears about another dangerous wave of coronavirus infections in some countries continued weighing on investors’ sentiment and drove some haven flows towards the Swiss franc. This, along with the prevalent bearish sentiment surrounding the US dollar, exerted some downward pressure on the USD/CHF pair.

The USD languished near multi-week lows amid speculations that the Fed will keep interest rates low for a longer period. Investors now seem convinced with the view that any spike in inflation is more likely to be transitory and have been scaling back their expectations for an earlier than anticipated Fed lift-off.

This was reinforced by the fact that a goodish intraday bounce in the US Treasury bond yields failed to impress the USD bulls. This, in turn, suggests that the path of least resistance for the USD/CHF pair remains down. Hence, a subsequent fall towards 200-day SMA, around the 0.9100-0.9095 area, looks a distinct possibility.

Market participants now look forward to the release of the usual Initial Weekly Jobless Claims data from the US. Apart from this, the US bond yields might influence the USD price dynamics and provide some impetus to the USD/CHF pair. Traders will further take cues from the broader market risk sentiment for some short-term opportunities.

Technical levels to watch

 

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