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USD/CHF bounces off lows, still in the red just above 0.9900 handle

  • The SNB’s decision to maintain status-quo prompted some long-unwinding on Thursday.
  • Sliding US bond yields held the USD bulls on the defensive and added to the selling bias.
  • Cautions mood benefitted the CHF’s safe-haven status and exerted additional pressure.

The USD/CHF pair reversed a knee-jerk drop and quickly recovered around 20-25 pips in the last hour, albeit lacked any strong follow-through.
 
The pair remained under some selling pressure for the second consecutive session on Friday and was seen extended the overnight pullback from three-month tops. The fact that the SNB refrained from following the ECB and the Fed by not cutting rates provided a goodish lift to the Swiss Franc (CHF) and prompted some long-unwinding trade on Thursday.

Cautious mood/weaker USD exert some pressure

The CHF further benefitted from reviving safe-haven demand amid fears of a further escalation of geopolitical tensions in the Middle East. This coupled with renewed US Dollar selling bias, undermined by weaker US Treasury bond yields and despite a hawkish rate cut by the Fed, exerted some follow-through selling on the last trading day of the week.
 
Despite the pullback, the pair has still managed to hold its neck above the weekly bearish gap opening lows, suggesting some dip-buying interest at lower levels on the back of the recent encouraging trade-related developments. Hence, the key focus will be on the lower-level trade talks, which will lay the groundwork for high-level discussions in early-October.
 
Meanwhile, absent relevant market moving economic releases from the US leaves the pair at the mercy of broader market risk sentiment and the USD price dynamics. Later during the US trading session, a scheduled speech by Boston Fed President Eric Rosengren will be looked upon for some short-term trading opportunities on the last day of the week.

Technical levels to watch

 

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