USD/CHF surrenders early gains to 1-week tops, still comfortably above 0.9700

The USD/CHF pair struggled to capitalize on its early uptick to one-week tops and now seemed headed back to the lower end of its daily trading range.

The pair built on last week's goodish bounce from the 0.9640-35 region and gained some follow-through traction on the first day of a new trading week. The intraday positive move for the third consecutive session was supported by the upbeat market mood, which tends to undermine the Swiss franc's safe-haven demand.

Bulls, however, refrained from placing any aggressive bets amid worsening US-China relations. China formally tabled national security laws for both Hong Kong and Macau. This comes the US President Donald Trump threatened to take strong action if the law is passed and fueled worries about a major US-China tussle.

Meanwhile, the US dollar witnessed a subdued/range-bound trading action through the early part of Monday's trading action. This, in turn, did little to provide any meaningful impetus to the USD/CHF pair and led to a modest intraday pullback of around 20-pips from the vicinity of the 0.9730-50 heavy supply zone.

Given that the US banks will be closed in observance of Memorial Day, relatively thin liquidity conditions further warrant some caution before placing fresh bets. Hence, it will be prudent to wait for some strong follow-through buying before bulls make a fresh attempt to retest the 200-day SMA barrier near the 0.9780 region.

Technical levels to watch