USD/CHF bounces off multi-month lows amid stronger USD, risk-off mood capping gains

A goodish pickup in the USD demand assisted USD/CHF to gain some positive traction.
A turnaround in the risk sentiment benefited the safe-haven CHF and capped the upside.
The focus remains on developments surrounding the US stimulus and US-China relations.

Haresh Menghani FXStreet

The USD/CHF pair quickly recovered around 40 pips from the early European session dip to over four-month lows and refreshed daily tops, around mid-0.9300s in the last hour.

The pair managed to find some support ahead of the 0.9300 round-figure mark and for now, seems to have stalled its recent bearish trajectory amid a goodish pickup in the US dollar demand. Against the backdrop of the ever-increasing COVID-19 cases, concerns about worsening US-China relations benefitted the greenback's status as the global reserve currency. This, in turn, was seen as one of the key factors behind the USD/CHF pair's modest uptick witnessed over the past hour or so.

Diplomatic tensions between the world's two largest economies escalated further after the United States asked China to close its consulate in Houston in order to protect American intellectual property. The US State Department Spokesperson Ortagus said on Wednesday that the US will not tolerate any violation of its sovereignty. China’s foreign ministry strongly condemned the move and threatened retaliation, sparking fears that the latest dispute could halt the US-China trade deal.

The developments took its toll on the global risk sentiment and the same was evident from a sharp turnaround in the equity markets. The risk-off mood underpinned the Swiss franc's perceived safe-haven and kept a lid on any strong recovery for the USD/CHF pair. This makes it prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out and positioning for any further gains amid the impasse over the next round of US economic stimulus measures.

It is worth reporting that policymakers have been struggling to reach consensus on a $3 trillion relief bill. The said bill was passed by the Democrat-majority House of Representatives two months ago but has been ignored by the Republican-majority Senate. Hence, the key focus will remain on developments surrounding the US stimulus package and US-China relations.

Technical levels to watch

USD/CHF

Overview
Today last price	0.9337
Today Daily Change	0.0006
Today Daily Change %	0.06
Today daily open	0.9331

Trends
Daily SMA20	0.9433
Daily SMA50	0.9532
Daily SMA100	0.9593
Daily SMA200	0.9701

Levels
Previous Daily High	0.9398
Previous Daily Low	0.9321
Previous Weekly High	0.9468
Previous Weekly Low	0.937
Previous Monthly High	0.9651
Previous Monthly Low	0.9376
Daily Fibonacci 38.2%	0.9351
Daily Fibonacci 61.8%	0.9369
Daily Pivot Point S1	0.9302
Daily Pivot Point S2	0.9273
Daily Pivot Point S3	0.9225
Daily Pivot Point R1	0.9379
Daily Pivot Point R2	0.9427
Daily Pivot Point R3	0.9456

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.