USD/CHF gains positive traction for second straight session
• Building on previous session’s bullish gap above 200-DMA.
• Surging US bond yields/resurgent USD demand supportive.
• A follow-through momentum needed to confirm bullish bias.
The USD/CHF pair built on previous session's strong up-move and challenged 0.9870 hurdle during the early European session on Tuesday.
The US tax bill optimisim-led solid US Dollar gains helped the pair to open with a bullish gap above the very important 200-day SMA on Monday. This coupled with a follow-through upsurge in the US Treasury bond yields, backed by reviving hopes for an aggressive Fed monetary policy tightening cycle in 2018, provided an additional boost to the pair's recovery move from 100-day SMA touched on Friday.
Meanwhile, a subdued action around European equity markets did little to influence the Swiss Franc's safe-haven appeal, with the USD price-dynamics and surging US bond yields driving the pair higher for the second straight session.
It would now be interesting to see if bulls are able to maintain their dominant position or once again fail to clear 0.9870-80 supply zone ahead of the US economic docket, featuring the release of trade balance data and ISM non-manufacturing PMI.
Technical levels to watch
A convincing break through the mentioned barrier is likely to accelerate the up-move even beyond the 0.9900 handle towards its next hurdle near the 0.9935-40 region.
On the flip side, 0.9845 level now seems to act as immediate support, which if broken might drag the pair back towards 200-day SMA support near the 0.9800 handle.