USD/CHF turns flat near 0.9130 after testing 0.9100

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  • USD/CHF pared daily losses ahead of the American session.
  • US Dollar Index stays in the negative territory on Tuesday.
  • Wall Street’s main indexes look to open decisively higher.

The USD/CHF staged a modest rebound on the back of broad-based USD strength on Monday and closed in the positive territory. Although the pair lost its traction and retreated to 0.9100 area during the European trading hours, it recovered its losses and was last seen posting small gains at 0.9128.

Vaccine headlines continue to impact markets

With AstraZeneca announcing potential maximum effectiveness of 90% for its coronavirus vaccine candidate on Monday, risk flows started to dominate the financial markets at the start of the week. The sharp upsurge witnessed in the US Treasury bond yields helped the USD gather strength despite the risk-on market environment.

On Tuesday, major European equity indexes gain around 1% to show that the market mood remains upbeat. On the other hand, the US Dollar Index (DXY) failed to preserve its bullish momentum and returned to 92.30 area, where it was down 0.2% on the day. Nevertheless, the CFH also finds it difficult to find demand as a safe-haven and allows USD/CHF to limit its losses.

In the second half of the day, the Richmond Fed Manufacturing Index, the Conference Board Consumer Confidence Index and the Housing Price Index will be featured in the US economic docket. Meanwhile, the S&P 500 Futures are up 0.8%, suggesting that the DXY is unlikely to stage a rebound unless T-bond yields turn not. At the moment, the 10-year reference is flat at 0.86%.

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