USD/CHF rebounds from 17-month lows, stays in red below 0.9650

• Rising number of coronavirus infections globally weigh on sentiment.
• Major European equity indexes suffer heavy losses on Friday.
• US Dollar Index extends slide toward 98 ahead of key data.

The selling pressure surrounding the greenback and the intense flight-to-safety dragged the USD/CHF pair to its lowest level since September 2018 at 0.9610 on Friday. Although the pair staged a modest recovery in the last hour, it continues to trade in the negative territory. As of writing, the pair was down 0.4% on the day at 0.9640.

The rising number of coronavirus infections at an accelerated rate globally continues to ramp up the demand for safe-haven assets. The 10-year US Treasury bond yield extended its slide and renewed its all-time lows on Friday to reflect the dismal mood. Additionally, major equity indexes in Europea are erasing nearly 4% on the day.

Fed rate cut odds increase sharply

Meanwhile, with markets pricing an imminent Fed rate cut in March, the greenback is struggling to find demand to keep the bearish pressure on the pair intact. According to the CME Group FedWatch Tool, the probability of a 25 basis points and a 50 basis points rate cut now stands at 55% and 45%, respectively. 

Ahead of the PCE Price Index, Personal Income, Personal Spending and Trade Balance data from the US, the US Dollar Index is down 0.27% on the day at 98.12. 

Technical levels to watch for