USD/CHF Recovers for a Bullish Correction – Buy Signal Update!
Arslan Butt • 2 min read
The USD/CHF failed to stop its overnight declining streak, remaining depressed just above the 0.8900 level, mainly due to the worsening coronavirus (COVID-19) situation in the US, Europe and some of the notable Asian nations, like Japan. This is fueling doubts over global economic recovery and weighing on the market trading sentiment. Apart from this, geopolitical tensions between China and some notable countries, like the US, have added further pressure to the equity market.
As a result, the risk-off market sentiment has driven some haven flows towards the safe-haven Swiss franc, which, in turn, isseen as one of the key factors that is exerting pressure on the USD/CHF pair. Conversely, the strength of the broad-based US dollar, backed by the market risk-off tone, has become a key factor that has kept a lid on any additional losses in the currency pair. In the meantime, the positive developments concerning the coronavirus (COVID-19) vaccine are helping to limit deeper losses in terms of the market trading sentiment, which might provide some support for the currency pair. The USD/CHF is currently trading at 0.8918, and consolidating in the range between 0.8903 and 0.8926.
As per the latest report, the resurgence of the coronavirus (COVID-19) in Europe and the US is still not showing any signs of slowing down, which keeps fueling doubts over economic recovery, as the authorities in the US and Europe keep announcing back-to-back restrictions over activities, in an attempt to curb the spread of the virus. Los Angeles has logged another record high in coronavirus cases, and due to the rate at which the virus is currently spreading, California has forced bars, tattoo shops and hair salons to close their doors.
Across the pond, the Federal State of Bavaria in southern Germany has declared that it will impose stronger lockdown measures from Wednesday until Jan. 5, while the South Korean authorities have imposed stricter social distancing rules for the capital, Seoul, and surrounding areas. This, in turn, has placed bearish pressure on the market risk sentiment, contributing to losses for the currency pair.
On the technical side, the USD/CHF pair is supported over the 0.8886 level, and it’s bouncing off to a complete 23.6% Fibonacci retracement level at the 0.8935 level. On the higher side, a bullish crossover at the 0.8933 level could extend the buying trend until a 61.8% Fibonacci retracement level of 0.8965. Good luck!