USD/CHF struggles near 3-month lows, around 0.9800 handle
• Fading safe-haven demand/softer Swiss CPI figures weigh on CHF.
• Persistent USD selling bias continues to cap any meaningful up-move.
• Focus remains on today’s release of the latest FOMC meeting minutes.
The USD/CHF pair lacked any firm directional bias and seesawed between tepid gains/minor losses around the 0.9800 handle.
A combination of diverging forces failed to assist the pair to build on the overnight attempted recovery from over three-month lows and led to a subdued/range-bound price action through the early European session.
The prevalent risk-on mood, supported by optimism over the US-China trade talks and reaffirmed by a positive mood across global equities, was seen denting the Swiss Franc's (CHF) perceived safe-haven status.
The CHF was further weighed down by the softer-than-expected Swiss consumer inflation figures, showing that the headline CPI fell 0.3% m/m in December and the yearly rate eased to 0.7% from 0.9% in November.
However, the US Dollar bulls failed to capitalize on the previous session positive momentum, shrugging off a follow-through pickup in the US Treasury bond yields and kept a lid on any subsequent up-move for the major.
Moreover, investors also seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of today's key event risk - the release of the latest FOMC meeting minutes, due later during the US trading session.
With markets pricing in a slower pace of Fed policy tightening cycle in 2019, today's important release might provide fresh insight over the central bank's policy outlook and eventually determine the pair's near-term trajectory.
Technical levels to watch
The 0.9790-85 region might continue to protect the immediate downside, below which the pair is likely to accelerate the fall towards 0.9750-45 intermediate support en-route the 0.9700 round figure mark. On the flip side, the 0.9830-35 region now seems to have emerged as an immediate hurdle, which if cleared might trigger a short-covering bounce and lift the pair back towards the very important 200-day SMA, around the 0.9880-85 region.