- The USD / CHF has now drifted into negative territory for the fifth consecutive session.
- A modest recovery in USD demand, the underlying bullish mood could help limit losses.
USD / CHF fell about 30 pips from early European session highs and refreshed daily lows, to around the 0.8825 region in the past hour.
As U.S. Congressional negotiators have yet to agree on a new coronavirus relief package, the U.S. dollar saw a short rebound 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 ground during the first half of the trading action on Friday.
The rise, however, lacked solid follow-up, instead met a new supply near the 0.8855 region and took 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.
Additionally, a combination of factors could prevent investors from placing aggressive bets and could lead to short-term consolidation of the USD / CHF pair. The underlying bullish mood in equity markets, which tends to undermine the safe-haven Swiss franc, could prolong some support and help limit larger losses, at least for now.
The supporting factor, to a greater extent, was offset by reports that the United States should add dozens of Chinese companies, including the SMIC, to a trade blacklist. Apart from that, Britain and the European Union have taken a pessimistic tone about the likelihood of a post-Brexit trade deal, which could further prevent investors from taking aggressive risks.
Nonetheless, the USD / CHF pair remains on track to post its fifth consecutive weekly decline. In the absence of major economic releases in the market from the United States, the headline of the US stimulus will influence the price dynamics in USD. Apart from this, the broader sentiment of market risk will also be examined for certain short term trading opportunities.