USD/CHF struggles below 0.8900 mark, hangs near multi-year lows set on Monday
- A softer risk tone benefitted the safe-haven CHF and exerted some pressure on USD/CHF.
- A modest USD uptick seemed to the only factor that might help limit losses for the major.
- The set-up seems tilted firmly in favour of bearish traders, though warrants some caution.
The USD/CHF pair remained depressed through the mid-European session and was last seen trading near the lower end of its daily range, just below the 0.8900 mark.
The pair edged lower on Tuesday and moved well within the striking distance of the lowest level since January 2015 touched in the previous session. A slight deterioration in the global risk sentiment underpinned the safe-haven Swiss franc, which, in turn, was seen as a key factor exerting pressure on the USD/CHF pair.
Worries about the continuous surge in new coronavirus cases overshadowed the recent optimism over the rollout of a vaccine for the highly contagious diseases and weighed on investors' sentiment. This was evident from a weaker tone around the equity markets and drove investors towards traditional safe-haven assets.
The negative factor, to a larger extent, was offset by a modest pickup in the US dollar demand, which extended some support to the USD/CHF pair and helped limit any deeper losses. Traders also seemed reluctant to place fresh bearish bets amid oversold conditions on short-term charts and empty US economic docket.
Meanwhile, expectations that US lawmakers will agree to an emergency coronavirus stimulus plan might keep a lid on any runaway rally for the USD. This, along with the USD/CHF pair's inability to register any meaningful recovery, suggests that the recent bearish trend might still be far from being over.
That said, it will still be prudent to wait for a modest bounce or some near-term consolidation before positioning for any further depreciating move, possibly towards the next relevant bearish target around the 0.8810-0.8800 region.
Technical levels to watch