The USD/CHF pair faded an early European session spike and has now retreated to the lower end of its daily range, around the 0.9080 region.
Following an early uptick to levels beyond the 0.9100 mark, the pair met with some fresh supply and drifted into the negative territory for the third consecutive session on Thursday. However, a combination of supporting factors helped limit any deeper losses.
The US dollar witnessed some intraday short-covering move from two-year lows amid extremely oversold conditions. Adding to this, the upbeat market mood undermined the safe-haven Swiss franc and further collaborated towards extending some support to the USD/CHF pair.
Meanwhile, concerns about the pace of the US economic recovery, along with the impasse over the next round of the US fiscal stimulus measures might also hold the USD bulls from placing aggressive bets. This, in turn, should cap the upside for the USD/CHF pair.
The pair’s inability to gain any meaningful traction clearly indicates that the near-term bearish trend might still be far from being over. However, oscillators on short-term charts are flashing oversold conditions and warrant some caution for bearish trades.
Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of the recent downtrend to multi-year lows. In the meantime, Thursday’s release of the US Initial Weekly Jobless Claims will be looked upon for some trading impetus.