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USD/CHF recovers farther from yearly lows, beyond mid-0.9700s

  • The pair shows some resilience below 0.9700 handle and stages a goodish bounce.
  • A modest USD uptick provided an additional boost ahead of Powell’s scheduled speech.
  • Escalating geopolitical tensions might keep a lid on any strong follow-through recovery.

The USD/CHF pair built on its steady intraday up-move and climbed to fresh session tops, around the 0.9770 region during the mid-European session.

Having shown some resilience below the 0.9700 handle, or fresh yearly, the pair witnessed a dramatic intraday turnaround and has now erased the previous session's downfall to snap four consecutive days of losing streak. 

The recovery lacked any obvious fundamental catalyst and could be solely attributed to some short-covering move from oversold conditions, especially after the post-FOMC slump of around 320-pips over the past one week or so.

This coupled with a modest US Dollar rebound from multi-month lows, despite weaker US Treasury bond yields, provided an additional boost and further collaborated to the goodish intraday bounce of nearly 80-pips.

Traders now seemed inclined to cover their short positions ahead of the Fed Chair Jerome Powell's scheduled speech later during the US trading session this Tuesday, through the prevalent cautions mood might cap strong up-move.

Escalating geopolitical tension in the Middle East, especially after the US President Donald Trump announced fresh sanctions on Iran, might continue to benefit the Swiss Franc's safe-haven status and keep a lid on any runaway rally.

Hence, it would be prudent to wait for a strong follow-through up-move before confirming that the recovery is actually backed by genuine buying and the pair might have actually bottomed out in the near-term.

In the meantime, Tuesday's US economic docket - featuring the release of Conference Board's Consumer Confidence Index, Richmond Manufacturing Index and new home sales data, will be looked upon for some short-term impetus.

Technical levels to watch


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