USD/CHF fills bearish gap to move back above 200-DMA

Having witnessed a bearish gap opening to 4-week low near the 0.9900 handle, the USD/CHF pair staged a remarkable recovery and managed to move back above the very important 200-day SMA.

The pair reversed early losses and moved into positive territory to erode part of Friday's downslide amid a fresh wave of global risk-on trade, which tends to weigh on the Swiss Franc's safe-haven appeal.

A strong rally in the US treasury bond yields, led by renewed optimism over the US President Donald Trump's tax reform plans, further extended support to the US Dollar and collaborated to the pair's sharp recovery from the lowest level since late March.

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The up-move, however, seems to have run through some fresh supply near 0.9980 level and the pair has now retreated back to 0.9950-60 band.

In absence of any major market moving economic releases, broader market risk-sentiment and the US bond yield dynamics would continue to be key determinants of the pair's movement on Monday. Meanwhile, a scheduled speech by Minneapolis Fed President Neel Kashkari would also be looked upon for some trading impetus later during the NY session. 

Technical levels to watch

Immediate upside resistance is pegged near 0.9990-1.0000 region, which if cleared decisively might trigger a short-covering rally towards 1.0020 intermediate hurdle ahead of 1.0045-50 strong resistance. 

On the flip side, 200-day SMA near 0.9945 region now becomes immediate support to defend, which if broken would turn the pair vulnerable to head back towards multi-week lows support near the 0.9900 handle before eventually dropping to its next support near mid-0.9800s.