- USD/CHF prolonged its recent decline and dropped to the lowest level since June 16.
- Reviving safe-haven demand benefitted the CHF and exerted pressure amid softer USD.
- Oversold conditions on hourly charts helped limit further losses ahead of the US data.
The USD/CHF pair has managed to reverse an early European session dip to fresh six-week lows and was last seen trading in the neutral territory, around the 0.9055-60 region.
The pair prolonged this week's rejection slide from the 0.9200 round-figure mark and witnessed some selling during the first half of the trading action on Friday. Worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery continued weighing on investors' sentiment. This, in turn, benefitted the safe-haven Swiss franc and exerted some downward pressure on the USD/CHF pair.
Meanwhile, the risk-off impulse in the markets triggered a fresh leg down in the US Treasury bond yields. Against the backdrop of Fed Chair Jerome Powell's dovish remarks on Wednesday, sliding US bond yields kept the US dollar bulls on the defensive. This further contributed to the USD/CHF pair's decline to the lowest level since June 16. That said, oversold conditions on intraday charts helped limit any further losses.
The USD/CHF pair managed to find some support near the 0.9040-35 region, though any meaningful recovery still seems elusive. Given the overnight sustained weakness below the very important 200-day SMA, the bias remains tilted in favour of bearish traders. Hence, any meaningful recovery attempt beyond the mentioned support breakpoint might be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
Market participants now look forward to the US economic docket, highlighting the release of the Core PCE Price Index, along with Chicago PMI and revised Michigan Consumer Sentiment Index. Apart from this, the US bond yields will influence the USD price dynamics and provide some impetus to the USD/CHF pair. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the major.
Technical levels to watch
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