USD/CHF depressed below mid-0.9100s amid some repositioning ahead of US elections

• A broad-based USD weakness prompted some selling around USD/CHF on Tuesday.
• The upbeat market mood, a pickup in the US bond yields might help limit the fall.
• Investors might refrain from placing fresh bets amid the US political uncertainty.

The USD/CHF pair continued losing ground through the early North American session and slipped below mid-0.9100s, or two-day lows in the last hour.

The pair witnessed some long-unwinding trade on Tuesday and snapped six consecutive days of the winning streak to one-month tops – levels just above the 0.9200 round-figure mark touched in the previous session. Heading into the election day in the US, increasing odds of a victory for Democratic candidate Joe Biden prompted some aggressive US dollar selling.

The former vice-president is expected to spend big on stimulus, which, in turn, drove flows away from the greenback and was seen as one of the key factors exerting pressure on the USD/CHF pair. Investors, however, took a more cautious approach rather than placing outright bets on a particular outcome amid the possibility of the result being contested in court.

Apart from this, indications of a strong opening in the US equity markets might undermine demand for the safe-haven Swiss franc and help limit the downside for the USD/CHF pair. The risk-on mood was reinforced by a goodish pickup in the US Treasury bond yields, which could further lend some support to the greenback, warranting caution for bearish traders.

Hence, it will be prudent to wait for some follow-through selling before confirming that the USD/CHF pair might have already topped out in the near-term and positioning for any further depreciating move. Hence, any subsequent fall is more likely to attract some dip-buying near the 0.9130 region, which if broken decisively should pave the way for additional weakness.

Technical levels to watch