After an initial dip to 0.9765 level, the USD/CHF pair resumed its near-term bullish momentum and jumped back above 0.9800 handle for the first time in nearly three weeks.
The greenbacks, as measured by the overall US Dollar Index, extended its overnight gains led by hawkish comments from various Fed officials that the central bank would go ahead and raise interest-rate by the end of 2016, lifting the major higher for seventh consecutive session.
Monday's release of core PCE price index, the Fed's preferred inflation gauge, showed consumer prices climbed 1.6% on a yearly basis and is nearing the central bank's 2% target area also extended support to the greenback. However, this week's key event risk remains the August non-farm payrolls (NFP) data, slated for release on Friday, and has the potential to trigger strong US Dollar moves in either direction.
From technical perspective, the pair has decisively cleared and is sustaining strength above a strong confluence resistance around 0.9740-50 region and hence, might continue to scale higher towards retesting 200-day SMA.
Technical levels to watch
On a sustained move above 0.9800 handle the pair seems all set to extend the upward trajectory immediately towards the very important 200-day SMA resistance near 0.9830-32 region. A convincing move above 200-day SMA resistance should now pave way for continuation of the near-term appreciating move, initially towards 0.9900 round figure mark resistance and eventually towards July monthly high resistance near 0.9950 level.
Meanwhile on the downside, confluence resistance break near 0.9750-40 area now turns immediate support to defend, which if broken is likely to drag the pair immediately towards 0.9700 handle.
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