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  • US-China trade optimism weighed on CHF’s safe-haven status and remains supportive.
  • The USD fails to capitalize on surging US bond yields and might cap any strong gains.

The USD/CHF pair traded with a positive bias through the early North-American session on Monday, with bulls looking to extend the momentum further beyond the 0.9900 handle.
 
After Friday’s intraday pullback – led by softer headline NFP print from the US – the pair caught some fresh bids on the first day of a new trading week and remained well supported by fading safe-haven demand. The latest optimism over the resumption of the US-China trade talks continued boosting the global risk sentiment and was evident from a positive mood around equity markets, which tend to undermine demand for traditional safe-haven currencies – like the Swiss Franc.

Risk-on mood remains supportive

The risk-on mood was further reinforced by a strong follow-through upsurge in the US Treasury bond yields, which were further supported by the Fed Chair Jerome Powell’s upbeat comments on the US economy on Friday. The US Dollar, however, failed to extract any support and remained depressed on the back of firming expectations that the Fed will eventually cut rates at its upcoming meeting in September, which might keep a lid on any strong follow-through up-move for the major.
 
Heading into the key event risk, investors’ reluctance to place any aggressive bets might further collaborate towards capping gains. Hence, it will be prudent to wait for a strong follow-through buying before traders start positioning for any further near-term appreciating move in absence of any relevant market-moving US economic releases on Monday.

Technical levels to watch