USD/CHF resumes its downtrend and hits fresh week lows below 0.9245

• The dollar dives 0.5% on the day to test week lows at 0.9245.
• US Treasury bonds slide amid a negative market mood.
• Concerns about surging COVID-19 cases are casting doubts on China's economic recovery.

The Greenback’s reversal from Wednesday’s highs near 0.9300 is gaining traction on Thursday’s European trading with the pair testing fresh intra-week lows below 0.9245, following a mild recovery attempt, which was capped at 0.9285 earlier today.

From a wider perspective, the pair is resuming its downtrend from the 0.9340 resistance area tested at the start of the week, dangerously approaching a key support hurdle around 0.9210/20.

The Dollar retreats as US bond yields tick down

With the economic calendar lacking first-tier indicators, the moderate decline in US Bond yields, with the benchmark 10-year note ticking down 2.4 basis points to 3.862% amid a sourer market mood is weighing on US Dollar’s demand.

The surging COVID-19 infections in China since the Government relaxed its Zero-Covid policy are overwhelming the country’s healthcare system, crushing market hopes of a solid recovery in the world’s second major economy.

Against this backdrop, some countries have started imposing restrictions on inbound travelers from China. The US and Italy have established mandatory tests on arrivals from the Asian country and India has just announced a similar measure.

Furthermore, escalating tensions in Ukraine, with the Russian army shelling Kyiv and other cities following Putin’s refusal to accept Zelenski’s 10-point peace plan, has contributed to dampening market sentiment

On the economic calendar, the Swiss ZEW survey posted larger-than-expected improvement on Wednesday. Economic expectations improved to a -42.8 reading in December against market expectations of -50.5 and from the -57.5 seen in the previous month.

Today the US weekly jobless claims and crude oil stocks figures will be observed in an otherwise thin post-Christmas calendar.

Technical levels to watch