USD/CHF clings to gains around 0.9100, bulls await sustained move beyond 100-day SMA

The USD/CHF pair gains positive traction for the second successive day on Monday and maintains its bid tone heading into the North American session. The pair is currently placed just above the 0.9100 mark, with bulls awaiting a sustained move beyond the 100-day Simple Moving Average (SMA) before placing fresh bets.

The post-NFP US Dollar (USD) rebound from over a one-week low remains uninterrupted on the first day of a new week amid expectations that the Federal Reserve (Fed) could hike interest rates again to contain stubbornly high inflation. In fact, the current market pricing indicates around a 30% chance of another 25 bps lift-off at the next policy meeting on June 13-14 and the bets were reaffirmed by robust US monthly employment details released on Friday. This, in turn, remains supportive of a further rise in the US Treasury bond yields, which continues to underpin the Greenback and acts as a tailwind for the USD/CHF pair.

The Swiss Franc (CHF), on the other hand, is pressured by a generally positive tone around the equity markets, which tends to drive flows away from traditional safe-haven currencies. The market sentiment remains well supported by the latest optimism over the passage of legislation to lift the government's $31.4 trillion debt ceiling and avert an unprecedented American default. Adding to this, a private-sector survey showed on Monday that China's services activity picked up in May and further boosts investors' confidence, which, in turn, dents the CHF's safe-haven demand and lends additional support to the USD/CHF pair.

The markets, meanwhile, have pushed back their expectations for an imminent pause in the Fed's rate-hiking campaign to July and eased off on bets for rate cuts later in the year. This, in turn, favours the USD bulls and supports prospects for a further near-term appreciating move for the USD/CHF pair. A sustained move and acceptance above the 100-day SMA will reaffirm the positive outlook, setting the stage for an extension of the recent upward trajectory witnessed over the past month or so. Traders now look to the release of the US ISM Services PMI for some impetus and grab short-term opportunities on Monday.

Technical levels to watch