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  • Renewed US-China trade optimism helped build on the overnight goodish up-move.
  • Sliding US bond yields seemed to weigh on the USD and might cap any strong gains.

The USD/CHF pair finally broke out of its Asian session consolidation phase and spiked to one-week tops, around the 0.9935 region in the last hour.
Despite a subdued US Dollar demand, the pair on Thursday managed to gain some follow-through traction for the second consecutive session and built on the overnight solid intraday recovery of around 75-pips from three-week lows.

Risk-on mood remained supportive

The prevailing risk-on mood, supported by renewed optimism over a possible resolution of the prolonged US-China trade disputes, weighed on the Swiss Franc’s perceived safe-haven status and remained supportive of the positive move.
Hopes of a meaningful progress on a US-China trade deal reignited on Wednesday after Trump told reporters that both the sides are having some very good conversations on trade and an agreement could happen sooner than anyone thinks.
Meanwhile, a subdued US Dollar demand, possibly on the back of a modest pullback in the US Treasury bond yields, failed to provide any additional boost and might turn out to be the only factor that might keep a lid on any runaway rally.
In absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair’s momentum and produce some short-term opportunities.
From a technical perspective, the recent pullback stalled near a support marked by the lower end of a multi-week-old ascending trend-channel and hence, a subsequent move beyond the very important 200-day SMA might set the stage for the resumption of the recent bullish trajectory.

Technical levels to watch