USD/CHF clings to tepid recovery gains above 0.9700 handle

Extending its near-term range-bound price action, the USD/CHF pair is now seen extending rebound from sub-0.9700 handle to currently trade around 0.9725 level.

Having faced rejection just above 50-day SMA, the pair on Thursday dipped below 0.9700 handle in the aftermath of disappointing US monthly retail sales, which faded hopes of a Fed rate-hike action next week. The pair, however, managed to defend weekly low support and hold its near-term trading range. Earlier on Thursday, the pair jumped above 50-day SMA but failed to build on to its up-move despite of a downward revision to SNB's inflation projection. 

Focus now shift to US CPI release for August, later during NA trading session, which will be followed by the release of Prelim UoM Consumer Sentiment index for September, for immediate momentum play. However, next week's Fed monetary policy decision would remain the key determinant for the pair's near-term trajectory.

Technical levels to watch

From current levels, 0.9750-60 confluence region (comprising of 100-day and 50-day SMAs) might continue to act as immediate strong resistance. Only a sustained strength above this important resistance, and a subsequent move above 0.9785, would open room for further near-term appreciating move for the pair.

Alternatively, a decisive break below 0.9690 level (near-term trading range support) is likely to accelerate the slide immediately towards 0.9650 support before the pair eventually drops to its next major support near 0.9615-10 region.