USD/CHF holds steady near 0.9700 mark, lacks follow-through ahead of Powell’s speech

• USD/CHF edged higher on Wednesday and recovered further from one-week lows.
• The uptick lacked any strong bullish conviction amid a subdued USD price action.
• Cautious mood benefitted the safe-haven CHF and contributed towards capping.

The USD/CHF pair traded with a mild positive bias through the early European session, albeit struggled to preserve early gains to levels beyond the 0.9700 mark.

The pair managed to gain some positive traction on Wednesday and built on the overnight late rebound from one-week lows. However, a combination of factors kept a lid on any runaway rally, at least for the time being.

Anxiety about a fresh spike in virus cases overshadowed the optimism over some easing in lockdowns globally and continued weighing on investors sentiment. This, in turn, extended some support to the Swiss franc's safe-haven status.

On the other hand, the US dollar remained on the defensive amid risking bets that the Fed might push interest rates below zero, especially after the US President Donald Trump asked the US central bank to do more policy easing.

Meanwhile, several FOMC members have ruled out the possibility of negative interest rates in the US. Hence, the key focus will be on the Fed Chairman Jerome Powell’s speech on economic issues, scheduled later this Wednesday.

Powell's comments will play a key role in influencing the near-term USD price dynamics and provide some meaningful directional impetus to the swissy. In the meantime, the pair seems more likely to continue with its subdued trading action.

Technical levels to watch