- USD / CHF has now drifted into negative territory for the fifth consecutive session.
- A modest pickup in USD demand, the underlying bullish mood could help limit losses.
The pair USD/CHF it fell around 30 pips from the swing highs at the beginning of the European session and refreshed the daily lows, around the 0.8825 region in the last hour.
As negotiators in the US Congress have yet to agree on a new coronavirus relief package, the US dollar experienced a rebound in short coverage on the last trading day of the week. This, in turn, was seen as one of the key factors that helped the USD / CHF pair gain some traction during the first half of the trading action on Friday.
The rally, however, lacked solid follow-up, instead meeting new offers near the 0.8855 region and dragging the USD / CHF pair into negative territory for the fifth consecutive session. The pair now appears vulnerable to further decline, although short-term oversold conditions warrant some caution before placing further bearish bets.
Furthermore, a combination of factors could prevent investors from placing aggressive bets and could lead to a short-term consolidation for the USD / CHF pair. The underlying bullish sentiment in equity markets, which tends to undermine the safe-haven Swiss franc, could extend some support and help limit deeper losses at least for now.
The support factor, to a greater extent, was offset by reports that the US will add dozens of Chinese companies, including SMIC, to a trade blacklist. Aside from this, Britain and the European Union took a pessimistic tone about the likelihood of a post-Brexit trade deal, which could prevent investors from taking aggressive risks.
However, the USD / CHF pair is still on track to record its fifth consecutive weekly decline. In the absence of major economic releases to move the US market, the US stimulus headline will influence USD price dynamics. Apart from this, the broader market risk sentiment will also be considered for some short term trading opportunities.
Technical levels
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