- USD/CHF added to the previous day’s positive move and gained follow-through traction on Monday.
- The risk-on mood undermined the safe-haven CHF and was seen as a key factor extending support.
- A sudden pickup in the USD demand provided an additional boost to the pair and remained supportive.
The USD/CHF pair shot to over three-month tops during the early European session, with bulls making a fresh attempt to build on the momentum beyond the 0.9100 mark.
The pair built on the previous session's strong positive move and gained some follow-through traction on the first day of a new trading week. A fresh leg up in the equity markets undermined demand for the safe-haven Swiss franc and was seen as one of the key factors that extended some early support to the USD/CHF pair.
The uptick got an additional boost from a sudden pickup in the US dollar demand. The US Treasury bond yields remained a key focal point amid hopes over a strong global economic recovery. The impressive pace of COVID-19 vaccinations and the progress on a massive US fiscal spending plan has been fueling the reflation trade.
In fact, the House of Representatives passed US President Joe Biden's proposed $1.9 trillion pandemic relief package on Saturday. This, in turn, forced investors to price in the prospects for a rise in inflationary pressure and raised doubts that the Fed would retain ultra-low rates for a longer period.
This eventually continued underpinning the US bond yields and extended some support to the greenback. Apart from this, the momentum could further be attributed to technical buying above the 0.9080-85 supply zone. Hence, a subsequent strength towards 200-day SMA, around the 0.9145 region, looks a distinct possibility.
Market participants now look forward to the US economic docket, highlighting the release of the ISM Manufacturing PMI. This, along with the US bond yields, will influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment in order to grab some short-term opportunities.
Technical levels to watch
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