The pair failed to capitalize on its modest gains recorded over the past two trading sessions and witnessed a dramatic turnaround from two-week tops. The downfall was exclusively sponsored by the emergence of some fresh selling around the US dollar, which was weighed down by a fresh leg down in the US Treasury bond yields.
The US dollar was pressured by a goodish pickup in the shared currency, which remained supported by optimism over a deal on the EU’s proposed package. Investors remain convinced that the European leaders will make progress in agreeing on a €750 billion coronavirus recovery fund, aimed at aiding the region’s worst-hit economies.
Meanwhile, the likelihood of more stimulus helped offset concerns about the continuous rise in COVID-19 cases around the globe and worsening US-China relations. This coupled with positive news over the development of a vaccine for the highly contagious coronavirus boosted investors’ appetite for perceived riskier assets.
The risk-on flow was evident from a positive tone around the global equity markets, which tends to undermine demand for the safe-haven Swiss franc. The upbeat market mood, however, did little to impress bulls or extended any support to the USD/CHF pair.
Market participants now look forward to the US economic docket, featuring the release of housing market data and the Prelim Michigan Consumer Sentiment Index. The data might influence the USD price dynamics, which along with the broader market risk sentiment will produce some trading opportunities at the beginning of the week.
USD/CHF LONG (Buy)
ENTER AT: 0.93900