USD/CHF clings to gains near three-week highs

The USD/CHF pair quickly reversed SNB-led slide to 0.9618 and touched a three-week high in the past hour, albeit has retreated few pips thereafter.

On Thursday, the Swiss National Bank (SNB) left its key benchmark interest rates unchanged, with sight deposit rate and 3-mth LIBOR target range at -0.75 and -1.25% to -0.25 respectively. 

The central bank, in its quarterly monetary policy assessment, noted that CHF remains highly valued and reiterated its willingness to intervene in the FX market. The central bank also said that negative rates and FX intervention was essential to reduce attractiveness of CHF investments and to ease pressure on the currency. 

The Swiss Franc weakened following the announcement, lifting the pair to its highest level since August 23 and closer to 100-day SMA supply zone just below the 0.9700 handle. 

However, the prevalent cautious environment extended some support for the Swiss Franc's safe-haven appeal and capped further upside, at least for the time being.

Next in focus would be the much awaited release of US CPI print for August, which would have its implication on next week's FOMC meeting and should provide some fresh impetus for the major.

Technical levels to watch

A retracement back below 0.9640 level, leading to a subsequent break below 0.9620-15 area, would turn the pair vulnerable to break below the 0.9600 handle and head towards testing 0.9555-50 support zone.

On the upside, the 0.9690-0.9700 region (100-day SMA) remains immediate strong hurdle, which if conquered might trigger a short-covering rally towards its next resistance near 0.9765-70 area.