USD/CHF corrects from multi-week tops, flirting with 0.9900 handle

  • The CHF benefits from the global flight to safety despite US-China trade optimism.
  • Retreating US bond yields prompt some USD weakness and add to the selling bias.
  • Investors now look forward to the ECB decision/USD CPI figures for a fresh impetus.

The USD/CHF pair extended its intraday pullback from six-week tops and dropped to fresh session lows in the last hour, with bears now eyeing a follow-through weakness below the 0.9900 handle.
The pair stalled its recent strong positive momentum just ahead of the very important 200-day SMA and witnessed some aggressive long-unwinding trade during the early European session on Thursday.

Reviving safe-haven demand prompt some long-unwinding trade

Despite encouraging trade-related developments, reviving safe-haven demand seemed to be one of the key factors that underpinned the Swiss Franc and exerted some downward pressure on the major.
It is worth mentioning that the US President Donald Trump announced to delay a planned tariff hike on Chinese goods by two weeks as a gesture of goodwill to Beijing’s offer to buy more US agricultural products.
The global flight to safety was evident from a sharp intraday pullback in the US Treasury bond yields, which prompted a modest US Dollar pullback from one-week tops and further collaborated to the intraday slide.
It, however, remains to be seen if the latest leg of a sudden fall marks the end of the recent up-move or is still seen as a buying opportunity as investors look forward to the latest US consumer inflation figures for a fresh impetus.
This coupled with the ECB monetary policy decision-led volatility might influence the USD price dynamics and further contribute towards producing some meaningful trading opportunities on Thursday.

Technical levels to watch

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