USD/CHF flirts with multi-day lows near 0.8870 region, downside seems limited
|- USD/CHF witnessed some selling on Tuesday and retreated further from multi-week highs.
- A modest USD pullback from nearly one-month tops was seen exerting pressure on the pair.
- The upbeat market mood, rallying US bond yields might help limit further losses for the major.
The USD/CHF pair continued losing ground through the mid-European session and dropped to three-day lows, around the 0.8870-65 region in the last hour.
The pair failed to capitalize on its early uptick, instead met with some fresh supply near the 0.8915 area and extended the previous day's retracement slide from six-week tops. The downfall was exclusively sponsored by some renewed US dollar selling and seemed unaffected by the upbeat market mood, which tends to undermine demand for the safe-haven Swiss franc.
The global risk sentiment remained well supported by the optimism over the COVID-19 vaccine rollout and hopes for additional US fiscal stimulus measures. Investors have been pricing in the prospects for more aggressive fiscal spending in 2021 under Joe Biden's presidency, which, to some extent, helped offset worries about the ever-increasing coronavirus cases.
Meanwhile, expectations for a larger government borrowing pushed the US Treasury bond yields higher across the board. This, in turn, could extend some support to the greenback and limit any further losses for the USD/CHF pair. Investors might also refrain from placing aggressive bets ahead of the President-elect Joe Biden's inaugural ceremony on Wednesday.
In the meantime, US Treasury Secretary nominee Janet Yellen’s confirmation hearing might influence the USD price dynamics amid absent relevant market moving economic releases. This, along with the broader market risk sentiment and developments surrounding the coronavirus saga, might further produce some short-term trading opportunities around the USD/CHF pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.