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  • USD/CHF regained positive traction on Monday and was supported by a combination of factors.
  • The risk-on environment undermined the safe-haven CHF and extended some support to the pair.
  • Surging US bond yields benefitted the USD and remained supportive of the intraday positive move.

The USD/CHF pair maintained its bid tone through the first half of the European session and climbed to fresh daily tops, around the 0.9010 region in the last hour.

A combination of factors assisted the pair to regain positive traction on Monday and recover a part of the previous session’s retracement slide from the 0.9045 region, or over two-month tops. The prevalent upbeat market mood undermined the safe-haven Swiss franc. This, coupled with some renewed US dollar buying interest, remained supportive of the USD/CHF pair’s intraday uptick.

The global risk sentiment remained well supported by hopes for a strong economic recovery amid the progress in coronavirus vaccinations and the likelihood for a massive US fiscal spending. Expectations for a larger government borrowing to fund the stimulus pushed the yield on the benchmark 10-year US bond to the highest level in nearly one-year and benefitted the greenback.

Friday’s unimpressive NFP report, showing that the US economy added 49K jobs in January, strengthened the case for more fiscal measures to support the economy. Bets for a massive US stimulus package increased further after the US Senate passed a budget resolution to fast track the approval of President Joe Biden’s proposed $1.9 trillion coronavirus relief plan without Republican support.

From a technical perspective, the recent breakout through the 0.8920-25 supply zone and the emergence of dip-buying supports prospects for additional gains. Bulls might look to build on the momentum further beyond the 100-day SMA and the USD/CHF pair seems all set to retest last week’s swing high, around the 0.9045 region amid absent relevant market-moving economic data.

Technical levels to watch