During Thursday’s early European trading hours, the USD/CHF currency pair failed to stop its overnight bearish bias and remained depressed for the 3rd-consecutive session on the day. However, the reason for the bearish bias around the currency pair could be associated with the broad-based U.S. dollar weakness, triggered by hopes for additional U.S. fiscal stimulus from the U.S. Federal Reserve. Moreover, the U.S. economic recovery concerns amid intensifying coronavirus woes also exerted downside pressure on the American currency, which turned out to be one of the major factors that kept the currency pair under pressure.
Across the pond, the disappointing ADP report on private-sector employment fueled worries about the economic fallout from the continuous surge in new COVID-19 cases in the United States, which also exerted downside pressure on the market trading sentiment and contributed to the currency pair losses. In the meantime, the on-going uncertainty over Brexit trade talks and worries of trade/political war between the West and China provides additional support to the safe-haven Swiss Francs, which adds further burden around the currency pair. Conversely, the selling bias surrounding the equity market was capped by the optimism over a potential vaccine for the hazardous coronavirus infection, which might help the currency pair limit its deeper losses.
The market risk-on tone faded instantly after the Trump administration issued new guidelines restricting travel to the U.S. by members of the Chinese Communist Party, which tend to fuel already intensified tension between the United States and China. Across the pond, the rising COVID-19 cases still not showing any sign of slowing down, which in turn strengthened lockdown restrictions across Europe and the U.S. As per the latest report, Germany and France have been introducing new measures to curb the virus spread. These concerns kept fueling the global economic recovery worries and kept the market trading sentiment under pressure.
Despite the risk-off-market sentiment, the broad-based U.S. dollar failed to stop its previous session declining streak and remained bearish on the day as doubts persist over the global economic recovery from COVID-19. Furthermore, the U.S. Federal Reserve’s expectations of further monetary easing also weigh on the U.S. dollar. Besides this, the encouraging data from COVID-19 vaccine developers urge investors towards riskier currencies and higher-yielding assets against the safe-haven asset, which eventually leads to losses in the safe-haven U.S. dollar. However, the U.S. dollar losses became the key factor that kept the currency pair under pressure.
On the contrary, the bearish bias around the equity market was capped by the prevalent optimism over a possible vaccine for the highly infectious coronavirus disease. However, the hopes of the vaccine were boosted after the United Kingdom became the first country to approve a vaccine jointly developed by Pfizer and BioNTech. These optimistic hopes become the key factor that lends some support to the currency pair to ease the intraday bearish pressure surrounding the USD/CHF currency pair.
Looking forward, the market traders will keep their eyes on the Unemployment Claims and the Final Services PMI for fresh directions. In addition to this, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will not lose their importance.
Daily Support and Resistance
Pivot Point 0.8968
The market’s technical side is exhibiting a sharp bearish bias for the USD/CHF as the pair is trading at a 0.8907 level. The USD/CHF pair has recently violated the descending triangle pattern on the daily timeframe, driving a sharp selling trend in the pair. For now, the pair may find resistance at 0.89500 and 0.9000 level while the support stays at the 0.8843 level. Let’s consider taking a buying trade near the 0.8843 level today. Good luck!