USD/CHF clings to recovery gains near session tops, around 0.9440 area
- USD/CHF gained traction on Tuesday and built on the overnight bounce from four-week lows.
- A modest pickup in the USD demand was seen as one of the key factors driving the pair higher.
- Concerns about rising coronavirus cases dented the global risk sentiment and might cap gains.
The USD/CHF pair edged higher through the early European session and was last seen trading near the top end of its daily trading range, around the 0.9435-40 region.
The pair once again showed some resilience below the 0.9400 round-figure mark and staged a modest bounce from four-week lows on Monday. The uptick was sponsored by a pickup in the US dollar demand following the release of the US ISM Non-Manufacturing PMI for June. The data added to last week's stellar US monthly jobs report and indicated that the US economy might have already started to recover.
This coupled with a strong rally in the US equity markets undermined demand for the safe-haven Swiss franc and remained supportive of the overnight bounce. The momentum extended through the first half of the trading action on Tuesday, helping the USD/CHF pair to snap five consecutive days of the losing streak and seemed rather unaffected by a slight deterioration in the global risk sentiment amid concerns about the second wave of coronavirus infections.
Investors remain concerned that the ever-increasing number of new COVID-19 cases could trigger renewed lockdown measures and once again put brakes on the economic activity. This, in turn, is expected to delay economic recovery and keep a lid on any optimism. The market worries were evident from a fresh leg down in the equity markets, which warrants some caution for bullish traders.
There isn't any major market-moving economic data due for release on Tuesday. Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CHF pair might have bottomed out in the near-term and positioning for any further recovery move.
Technical levels to watch