USD / CHF struggles below 0.8900, clings near multi-year lows set Monday

• A softer risk tone benefited the safe haven CHF and put some pressure on USD / CHF.
• A modest rally in the USD appeared to be the only factor that could help limit the pair’s losses.
• The setup seems firmly tilted in favor of bearish traders, although it warrants some caution.

The pair USD/CHF it remained depressed for the middle of the European session and was last seen trading near the lower end of its daily range, just below 0.8900.

The pair was down on Tuesday and moved well within hitting distance of the lowest level since January 2015 touched in the previous session. A slight deterioration in global risk sentiment sustained the safe-haven Swiss franc, which, in turn, was seen as a key factor putting pressure on the USD / CHF pair.

Concerns about the continued rise in new coronavirus cases overshadowed recent optimism about the launch of a vaccine for the highly contagious diseases and weighed on investor sentiment. This was evident by a weaker tone in equity markets and led investors towards traditional safe haven assets.

The negative factor, to a greater extent, was offset by a modest pickup in demand for the US dollar, which extended some support to the USD / CHF pair and helped limit deeper losses. Traders also appeared reluctant to place further bearish bets amid oversold conditions on short-term charts and an empty US economic docket.

Meanwhile, expectations that US lawmakers will agree to an emergency stimulus plan for the coronavirus could contain any runaway rally in the USD. This, together with the inability of the USD / CHF pair to register a significant recovery, suggests that the recent downtrend may still be far from over.

That being said, it will still be prudent to wait for a modest rebound or some near-term consolidation before positioning for any further depreciation moves, possibly towards the next relevant bearish target around the 0.8810-0.8800 region.

Technical levels