- USD/CHF attracts some dip-buying near the 0.9600 mark, albeit lacked follow-through.
- The upbeat market mood undermined the safe-haven CHF and extended some support.
- The prevalent offered tone surrounding the USD capped any strong gains for the major.
The USD/CHF pair refreshed daily tops, around the 0.9635 region in the last hour, albeit lacked any strong follow-through.
The pair quickly reversed an early European session dip to the 0.9600 neighbourhood and was now looking to build on the previous day's intraday recovery move from two-month lows. The easing of lockdown restrictions in major economies raised hopes for global economic recovery and boosted investors' confidence.
The upbeat market mood, as depicted by the ongoing positive move across the global equity markets, dented demand for traditional safe-haven currencies, including the Swiss franc. The CHF was further undermined by worse-than-expected Swiss GDP report, which showed that the economy contracted by 2.6% during the first quarter of 2020. Adding to this, the GDP fell 1.3% year-on-year as compared to a 0.9% growth anticipated.
This, in turn, extended some support to the USD/CHF pair, albeit the prevalent US dollar selling bias kept a lid on the attempted positive move. The greenback extended its downfall for the seventh session in a row on Wednesday and dragged the US Dollar Index to its lowest level since mid-March, around the 97.40 region.
A broad-based USD weakness seemed to be the only factor holding investors from placing any bullish bets and capping the upside for the USD/CHF pair. Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out and positioning for any meaningful recovery move. On the downside, the USD/CHF pair has been showing some resilience below the 0.9600 mark, also warranting some caution for bearish traders.
Moving ahead, market participants now look forward to the US macro data for some short-term trading opportunities. Wednesday's US economic docket highlights the release of the ADP report on private-sector employment and the ISM Non-Manufacturing PMI, which might influence the USD price dynamics and provide a fresh impetus.
Technical levels to watch