USD/CHF struggles near 2-year lows, around mid-0.9400s

• USD/CHF remains depressed amid the coronavirus-led selloff in equity markets.
• Collapsing US bond yields, Fed rate cut speculations continue to weigh on the USD.
• Market participants now look forward to the US jobs report (NFP) for some respite.

The USD/CHF pair managed to rebound around 20-25 pips from two-year lows and climbed back closer to daily tops, around the 0.9460 region, albeit lacked any follow-through.

The pair showed some resilience below mid-0.9400s and staged a modest recovery amid extremely oversold conditions. Apart from this, the bounce lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly amid growing market concerns about the coronavirus outbreak.

The upside seems limited

Investors fretted over the uncontained global spread of the virus and its economic impact on the world economy. The same was evident from a fresh wave of the global risk-aversion trade on Friday, which provided a strong boost to perceived safe-haven assets and might underpin the Swiss franc.

The global flight to safety aggravated the recent slump in the US Treasury bond yields to fresh record lows. This coupled with firming market expectations that the Fed will again cut rates by 50 bps on March 18 exerted some additional pressure on the already weaker US dollar and should cap any strong recovery.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of the closely watched US monthly jobs report (NFP). The data might provide some immediate respite for the USD bulls and produce some meaningful trading opportunities later during the early North-American session.

Technical levels to watch