• A sudden pickup in the USD demand helped build on the recent recovery move.
• Technical buying above mid-0.9600s provides an additional boost in the last hour.
• Further gains are likely to be limited amid cautious mood and ahead of the FOMC.
The USD/CHF pair finally broke out of its Asian/early European session consolidation phase and spiked to one week tops in the last hour.
After yesterday's directionless two-way moves, the pair regained positive traction on Wednesday and built on its recent recovery move from five-month lows set last Friday. A goodish pickup in the US Dollar demand, despite the ongoing retracement in the US Treasury bond yields, was seen as one of the key factors driving the pair higher.
The latest leg of a sudden spike over the past couple of hours could further be attributed to some technical buying above the Asian session tops, near the 0.9655-60 region. This coupled with some repositioning trade ahead of today's key event risk - the latest FOMC decision further collaborated to the ongoing positive momentum.
Further gains, however, are likely to remain capped amid the prevalent cautious mood around European equity markets, which tends to underpin the Swiss Franc's safe-haven demand. Investors might also refrain from placing any aggressive bets and prefer to wait for fresh clues over the Fed's near-term monetary policy outlook, and the pace of rate increases beyond September.
Technical levels to watch
The 0.9700 handle is likely to act as an immediate hurdle, above which the pair is likely to aim towards testing the very important 200-day SMA support-turned-resistance near the 0.9730-35 region. On the flip side, immediate support is now pegged near mid-0.9600s, which if broken might prompt some fresh selling and drag the pair back towards the 0.9600 round figure mark.
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