USD/CHF drops to two-week low, eyes 0.8200 amid sustained USD selling bias

• USD/CHF attracts sellers for the third consecutive day amid a broadly weaker USD.
• US fiscal concerns and Fed rate cut bets drag the USD to a nearly two-week trough.
• Reviving safe-haven demand benefits the CHF and contributes to the pair's downfall.

The USD/CHF pair continues to lose ground for the third successive day and drops to a two-week low, around the 0.8220-0.8215 region during the Asian session on Wednesday. Moreover, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside.

The US Dollar (USD) selling bias remains unabated in the wake of US fiscal concerns, which led to a surprise downgrade of the US government's sovereign credit rating last Friday. Adding to this, the growing market acceptance that the Federal Reserve (Fed) will cut interest rates further this year amid signs of easing inflationary pressure and a sluggish growth outlook drags the USD to a two-week low. Furthermore, reviving safe-haven demand is seen underpinning the Swiss Franc (CHF) and exerting additional downward pressure on the USD/CHF pair.

The recent optimism over the US-China trade truce fades rather quickly after the US issued guidance warning companies not to use Huawei's Ascend AI chips. In response, China accused the US of abusing export control measures and said that the Trump administration is violating Geneva trade agreements. Moreover, China's Commerce Ministry said this Wednesday that US measures on advanced chips are 'typical of unilateral bullying and protectionism.' This fuels concerns about deteriorating US-China trade relations and boosts safe-haven assets.

Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Wednesday, leaving the USD at the mercy of speeches from influential FOMC members. Furthermore, trade-related developments will drive the broader risk sentiment and the safe-haven demand, which should further contribute to producing short-term trading opportunities around the USD/CHF pair. Nevertheless, the aforementioned fundamental backdrop supports prospects for an extension of the pair's downfall witnessed over the past week or so.