- USD / CHF met a new offer on Tuesday amid renewed USD selling bias.
- The good mood of the market has undermined the safe haven of the CHF and could help limit losses.
- Investors might also be reluctant to place aggressive bets ahead of Powell’s speech.
USD / CHF fell slightly at the start of the European session and fell to new daily lows, around the 0.9080 region in the last hour.
The pair failed to capitalize on the intraday rebound of over 50 pips the day before, instead encountered a new offer on Tuesday and weakened below 0.9100 on Tuesday. The emergence of further selling around the US dollar was seen as one of the main factors putting some pressure on the USD / CHF pair.
However, the good mood in the market could undermine demand for the safe-haven Swiss franc and help limit larger losses. Global risk sentiment has remained well supported by hopes for a potential vaccine and treatment for the COVID-19 virus. This, combined with a positive trade-related development, further boosted investor confidence.
The U.S. Trade Representative’s office said in a statement that the U.S. and China see progress in resolving the issues in phase one of the trade agreement between the two countries. Other than that, a strong rally in US Treasury bond yields could extend some support to the greenback and help limit the decline in the USD / CHF pair.
Apart from that, investors might also be reluctant to place aggressive bets ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium. It is therefore prudent to wait for strong follow-up selling before positioning for an extension of the recently well established downtrend.
Looking ahead, market players are eagerly awaiting the economic role of the United States, highlighting the release of the Conference Board’s Consumer Confidence Index. The data could influence USD price dynamics and produce short-term trading opportunities later in the start of the North American session.