USD/CHF trims daily losses and returns above 0.9100

• US dollar bounces up from session lows at 0.9085 and returns above 0.9100.
• The dollar loses ground on concerns about surging COVID-19 infections in the US.
• USD/CHF remains biased higher, likely to retest 0.9200 – Commerzbank.

The US dollar has bounced up from one-week lows at 0.9085 during Tuesday’s US trading session and has returned above the 0.9100 level. The pair, however, remains negative on daily charts, extending its downtrend from last week's lows near 0.9200.

US dollar weakens on COVID-19 concerns

The greenback opened the day on sell tone, depreciating across the board as the COVID-19 pandemic continues surging in the US. The record numbers of infections, hospitalizations and deaths have prompted investors to anticipate further efforts by the US Government and the Federal Reserve to support economic recovery from the impact of the pandemic.

The Chairman of the Federal Reserve, Jerome Powell, has confirmed this view in a virtual event in California. Powell has guaranteed that the Fed will use all tools to support the recovery “for as long as it takes until the job is well and truly done.” This has weighed on US dollar demand and for the benefit of the safe-haven Swiss Franc.

On the macroeconomic front, US retail sales have given little ground for optimism. US retail consumption increased at a 0.3% pace in October, well below the 0.5% expected, and down from the 1.6% increase seen in September. The impact on the dollar, however, has been negligible.

USD/CHF might revisit 0.9200 – Commerzbank

On the technical front, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, sees the USD upside potential intact, for a rush towards 0.9200: “USD/CHF is consolidating following the recent strong reversal from the current November trough at .8983 and looks capable of challenging initial resistance provided by the recent high at .9207. Key resistance remains the September high at .9296. This guards the seven-month downtrend at .9327. For now, Elliott wave counts are suggesting dips back to .9100/.9080 should hold for another upside attempt.”

Technical levels to view