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USD/CHF on track to end day above 0.99 handle amid positive market sentiment

  • USD/CHF recovers the majority of Friday's losses.
  • US T-bond yields lift DXY toward the 94 handle.
  • US stocks start the week on a positive note.

Despite a lack of fresh fundamental drivers, the USD/CHF pair was able to stage a recovery on Monday following last Friday's sharp drop and is looking to close the day with modest gains. At the moment, the pair is trading at 0.9929, up 0.4%, or 40 pips.

Risk appetite returns to the markets

Escalating geopolitical tensions amid headlines from North Korea on Friday allowed traditional safe-havens to gather strength against their rivals. However, the market sentiment seems to have improved on Monday with major equity indexes in the U.S. gaining traction. As of writing, the Dow Jones Industrial Average and the S&P 500 indexes were up 0.4% and 0.25% respectively. Moreover, lower demand for safer US T-bonds is pushing their yields higher, supporting the view of a risk-on market environment, and allowing the greenback to stay resilient against other major currencies. 

  • US Dollar loses momentum ahead of 94, sticks to modest daily gains.

On Tuesday, the Federal Customs Administration in Switzerland is going to release the trade balance figures, which is expected to improve to CHF3,210 million from CHF2,918 million. Later in the day, the economic docket in the U.S. will feature the existing home sales data. However, before the FOMC releases the November meeting minutes on Wednesday, the pair is likely to remain in its recent range.

Technical levels to watch

The initial hurdle for the pair aligns at 1.000 (parity level) ahead of 1.0040 (Oct. 27 high/Nov. 1 high) and 1.0095 (May 10 high). On the downside, supports could be seen at 0.9850 (50-DMA), 0.9765 (200-DMA) and 0.9700 (psychological level/Oct. 15 low). The RSI indicator on the daily graph for the pair turned north above the 50 mark with today's rise, suggesting that bulls are gathering strength. 

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