USD/CHF struggles for direction, stuck in a range around mid-0.9100s

The USD/CHF pair held on to its modest intraday gains through the first half of the European session and was last seen trading just a few pips above mid-0.9100s.

Following the previous day's sharp turnaround of around 50 pips from weekly tops, the USD/CHF pair regained positive traction on Thursday and was supported by a combination of factors. The underlying bullish sentiment – as depicted by a generally positive tone around the equity markets – continued undermining the safe-haven Swiss franc. This, in turn, was seen as a key factor that acted as a tailwind for the USD/CHF pair, though a subdued US dollar price action failed to provide any additional boost.

The USD languished near one-month lows amid uncertainty over the likely timing of the Fed's tapering plan and concerns about the US labour market recovery. The market worries were fueled by Wednesday's disappointing ADP report that showed the US private-sector employers hired far fewer workers than expected in August. Investors now seem convinced that the Fed will wait for a longer period before raising rates. This was evident from a modest pullback in the US Treasury bond yields, which kept the USD bulls on the defensive.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for an extension of this week's rebound from the 0.9100 mark, or multi-week lows touched on Monday. Market participants now look forward to the US economic docket, featuring the release of Initial Weekly Jobless Claims. Apart from this, a scheduled speech by Atlanta Fed President Raphael Bostic might influence the USD. Traders might further take cues from the broader market risk sentiment for some opportunities around the USD/CHF pair.

Technical levels to watch