Short covering has helped the US dollar regain its poise in this first half of the week, underpinning the likes of the USD/CHF and undermining the likes of the EUR/USD. But fundamentally not a lot has changed to support the greenback. The buck may therefore come under renewed pressure in the coming days once the impact of short covering fades.

The USD/CHF was in fact probing a key technical area around 0.9905/15 at the time of writing. This area was the last low made before last week’s breakdown that finally pushed rates below the 200-day average and the bullish channel. Once support, the 0.9905/15 range has the potential to turn into resistance. If we see some bearish price action here, then rates could resume lower and head below the 0.9850 support over the coming days.

However, if the squeeze continues, then the next pivotal area to watch is at 0.9945/55, which was the base of the breakdown and where the 200-day comes into play.

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