USD/CHF drops to over 1-month lows, around mid-0.9800s

The USD/CHF pair witnessed some follow-through selling for the third consecutive session on Wednesday and dropped to over one-month lows, around mid-0.9800s in the last hour.

The pair extended this week's rejection slide from the key parity mark and continued losing ground through the early European session on Wednesday. Persistent trade uncertainty continued underpinning the Swiss franc's perceived safe-haven status and kept exerting downward pressure on the major.

Weighed down by escalating US-China tensions

In the latest trade development, the US President Trump on Tuesday indicated that a deal with China may not come until after the 2020 US presidential election and triggered a fresh wave of the global risk-aversion trade. The already weaker sentiment deteriorated further amid escalating tensions over the passage of Hong Kong and Xinjiang bills.

It is worth recalling that the US Congress overwhelmingly approved a bill condemning China’s mass detention of ethnic Muslims in the western region of Xinjiang. This comes after Trump last week signed a bill supporting Hong Kong’s pro-democracy protesters and was further seen as yet another setback to the trade negotiations.

Meanwhile, a subdued US dollar demand, though the downside remained limited amid stability in the US Treasury bond yields, did little to stall the pair's ongoing downfall to the lowest level since early-November. It will now be interesting to see if the pair is able to find any support at lower levels as the focus now shifts to the US macro data.

Wednesday's US economic docket features the release of ADP report on private-sector employment and the ISM Non-Manufacturing PMI, which might influence the USD price dynamics and contribute towards producing some short-term trading opportunities later during the early North-American session.

Technical levels to watch