USD/CHF pares majority of daily gains, steadies around 0.8860
- USD/CHF rose to its highest level in 12 days at 0.8919.
- US Dollar Index retreated below 90.50 after early upsurge.
- New strain of coronavirus forces investors to remain cautious.
The USD/CHF pair advanced to its highest level since December 9 at 0.8919 on Monday but struggled to preserve its bullish momentum during the American trading hours. As of writing, the pair was up 0.35% on the day at 0.8862.
DXY rally loses steam
The broad-based USD strength fueled USD/CHF's upsurge during the European trading hours. The heavy selling pressure surrounding global equity indexes and risk-sensitive assets helped the greenback attract investors at the start of the week.
Renewed concerns over the new strain of coronavirus causing nationwide lockdowns and the lack of progress in the UK-EU trade talks triggered a fresh bout of flight to safety and the US Dollar Index (DXY) advanced above 91.00.
In the second half of the day, the DXY lost its traction in the absence of significant fundamental drivers. The only data from the US showed that the Chicago Fed National Activity Index in November slumped to 0.27 from 1.01 in October but this reading was largely ignored by the market participants.
Nevertheless, major equity indexes in the US are down between 0.5% and 1.1%, suggesting that safe-haven flows are still intact and the USD could continue to outperform its rivals.
On Tuesday, the US Bureau of Economic Analysis will release the Gross Domestic Product (GDP) data for the third quarter, which is expected to show that the economy expanded by 33.1% on a yearly basis.
Technical levels to watch for