- USD/CHF rebounds from three-month lows and after falling four days.
- Without relevant data, the focus on Tuesday is geopolitics and the stock market.
- The employment report will be published in the US on Friday.
The pair USD/CHF rebounded nicely from 0.9470 zone, low since April, reached earlier this Tuesday. At the moment it breaks a streak of five days of losses. It is trading around 0.9520/24, having found support at the 0.9500 area.
A modest recovery of the US dollar from the four-week low set this Tuesday turns out to be a key factor offering support to the USD/CHF pair. That said, a combination of factors is preventing the bulls from positioning themselves meaningfully and limiting the upside, at least for now.
Rising fears of recession, coupled with mounting diplomatic tensions ahead of the planned visit to Taiwan by the Speaker of the US House of Representatives, Nancy Pelosi, continue to weigh on investor sentiment. This is manifesting in a softer tone around equity markets, which, in turn, extends support for the Swiss franc.
The anti-risk flow, coupled with expectations that the Federal Reserve will not raise interest rates as aggressively as anticipated, puts some pressure on US Treasury yields lower. This appears to act as a dollar headwind and contributes to limiting gains for the USD/CHF pair.
Therefore, it would be prudent to wait for strong follow-on buying before confirming that the USD/CHF pair has formed a short-term bottom and positioning for any significant recovery. Traders now await JOLTS job openings data on Tuesday. On Wednesday it will be the turn of the private sector ADP and on Friday the official report, with non-farm payrolls.
Technical levels
Source: Fx Street
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