- USD/CHF gained some positive traction on Monday, albeit lacked any follow-through buying.
- Diminishing odds for an early policy tightening by the Fed kept the USD bulls on the defensive.
- The prevalent cautious mood benefitted the safe-haven CHF and collaborated to cap the upside.
The USD/CHF pair struggled to capitalize on its intraday modest gains and retreated around 20 pips from daily tops, though has still managed to hold its neck above the 0.9200 mark.
The pair managed to gain some positive traction on the first day of a new trading week and recovered a part of the post-NFP slide from three-month tops, around the 0.9275 region touched on Friday. The uptick, however, lacked any follow-through buying and remained capped amid a modest US dollar weakness.
Friday's mixed US jobs report eased market fears that the Fed could tighten its monetary policy sooner than anticipated. The headline NFP print smashed estimates, though was largely offset by an unexpected rise in the unemployment rate, suggesting that the Fed will wait before tapering its asset purchases or hiking rates.
This, in turn, acted as a headwind for the USD. Apart from this, a cautious mood around the equity markets benefitted the safe-haven Swiss franc and further collaborated to keep a lid on any meaningful upside for the USD/CHF pair. Investors also seemed reluctant to place any aggressive bet amid holiday-thinned liquidity.
The market focus now shifts to the FOMC policy meeting, due on Wednesday, which will be looked upon for clues about the Fed's near-term policy outlook. This will play a key role in influencing the near-term USD price dynamics and assist investors to determine the next leg of a directional move for the USD/CHF pair.
Technical levels to watch
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