• US-China trade optimism dampens demand for safe-haven currencies.
• Positive US bond yields help revive USD demand and remain supportive.
The USD/CHF pair finally broke out of its Asian/early European session consolidation phase and spiked to over one-month tops, around the 0.9975-80 region in the last hour.
The pair built on last week's strong gains and continued gaining positive traction for the fifth consecutive session. The up-move seemed unaffected by the latest signs of a slowdown in China, rather took cues from fading safe-haven demand amid the latest optimism over the US-China trade talks.
Reports on Friday revealed that China has offered a six-year path to eliminate trade surplus with the US. The news added to the recent optimism that the US Treasury Secretary Steven Mnuchin suggested easing tariffs on China, though denied by the Treasury Department, and fueled hopes for a resolution in the US-China trade tensions.
Meanwhile, the latest leg of a sudden spike could further be attributed to a modest US Dollar uptick, which now seemed to have found some fresh buying interest and held near two week tops on the back of a follow-through pickup in the US Treasury bond yields, despite dovish Fed expectations.
It would now be interesting to see if bulls are able to maintain their dominant position or opt to take some profits off the table near the key 1.00 psychological mark amid absent relevant market moving economic release and a bank holiday in the US.
Technical levels to watch
Momentum beyond the 0.9980 level could lift the pair beyond the parity mark towards challenging the next hurdle near the 1.0020-25 region. On the flip side, the 0.9955-50 region now seems to act as immediate support, which if broken might accelerate the fall back towards the very important 200-day SMA support, currently near the 0.9900 handle.
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