USD/CHF clings to modest gains above 0.9700 mark, lacks follow-through
- USD/CHF attracts some dip-buying near 0.9700 mark amid the prevalent risk-on mood.
- A pickup in the US bond yields helped revive the USD demand and remained supportive.
- The technical set-up still warrants some caution before placing any aggressive bullish bets.
The USD/CHF pair edged higher during the early European session and was last seen trading near the top end of its daily trading range, around the 0.9730-35 region.
A combination of supporting factors assisted the USD/CHF pair to reverse an early dip to the 0.9700 mark and turned positive on the first day of a new trading week, snapping two consecutive days of losing streak.
The latest optimism over the re-opening of economies in some parts of the world, coupled with easing US-China tensions remained supportive of the prevalent risk-on mood and undermined the Swiss franc's safe-haven demand.
The upbeat market mood was further reinforced by a goodish pickup in the US Treasury bond yields, which helped revived the US dollar demand and further contributed to the pair's intraday bounce of over 35 pips.
However, speculations that the Fed might be forced to push interest rates below zero might hold the USD bulls from placing any aggressive bullish bets and eventually keep a lid on any strong gains for the Swissy.
This comes on the back of the recent repeated failures near the very important 200-day SMA and thus, warrants some caution before positioning for any further appreciating move amid absent relevant market-moving economic releases.
Technical levels to watch
Immediate resistance is pegged near the 0.9750-55 region, above which bulls are likely to make a fresh attempt towards challenging the 0.9785-90 heavy supply zone (200-DMA). On the flip side, the 0.9700-0.9680 region now seems to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards testing sub-0.9600 levels.