USD/CHF trades with negative bias around 0.8400, downside potential seems limited

• USD/CHF attracts some sellers on Thursday amid a modest USD weakness.

• The US-China trade deal optimism might cap the CHF and support the pair.

• Traders look to the Swiss/US PPI and Fed Chair Powell for a fresh impetus.

The USD/CHF pair struggles to capitalize on the previous day's modest gains and meets with a fresh supply during the Asian session on Thursday. The intraday downtick is sponsored by the emergence of some US Dollar (USD) selling and drags spot prices back below the 0.8400 mark in the last hour, though it lacks bearish conviction.

The US Dollar (USD) ticks lower as bulls opt to wait for the release of the US Producer Price Index (PPI) and Federal Reserve (Fed) Chair Jerome Powell's appearance later today. Apart from this, a slight deterioration in the global risk sentiment – as depicted by a generally weaker tone around the equity markets – benefits the Swiss Franc's (CHF) relative safe-haven status and exerts some downward pressure on the USD/CHF pair.

However, the optimism over the US-China trade truce for 90 days and the de-escalation of a trade war between the world's two largest economies keeps a lid on any further gains for the CHF. Furthermore, expectations of fewer interest rate cuts by the Fed, amid easing market concerns about a US recession, act as a tailwind for the Greenback and help limit the downside for the USD/CHF pair, warranting caution for bearish traders.

Traders now look forward to the Swiss PPI print for short-term opportunities. Nevertheless, the fundamental backdrop supports prospects for the emergence of some dip-buying at lower levels. Hence, it will be prudent to wait for strong follow-through selling below the 0.8325 area, or the overnight swing low, before confirming that the recent recovery from the 0.8040 area, or the lowest level since August 2011, has run out of steam.