USD/CHF fails to build on yesterday’s recovery, rejected at 200-DMA

The USD/CHF pair struggled to build on yesterday’s sharp recovery from the lowest level since March 28 and continued with its struggle to decisively break through the very important 200-day SMA hurdle. 

Wednesday's slightly better-than-expected ADP report and upbeat ISM non-manufacturing PMI helped the pair to reverse early losses to the lowest level since March 28. Adding to this, perceived hawkish Fed statement, leaving doors open for a June rate-hike move, triggered a bout of short-covering and lifted the pair back closer to the top end of nearly two-week old trading range resistance. 

   •  Fed: Probability of a hike at 90% post FOMC – Deutsche Bank

The pair, however, lacked follow through momentum and traded with mild negative bias on Thursday, now flirting with session lows around 0.9930 region during early European session amid a modest US Dollar retracement. The latest leg of downslide lacked any fundamental drivers and seems solely driven by the pair's repeated failed attempts to sustain its recovery move beyond the key 200-day SMA. 

The recent price-action clearly seems to suggest that the pair needs a strong catalyst to break through the recent trading range and hence, further increases the importance of Friday's US monthly jobs report (NFP). 

In the meantime, today's US economic docket that includes - weekly jobless claims, Prelim Nonfarm Productivity and Unit Labor Costs for the first quarter of 2017, along with Trade Balance and Factory Orders data, might provide some impetus for short-term traders. 

Technical levels to watch

Immediate support is pegged near 0.9915-10 region, closely followed by strong horizontal support near 0.9895-90 region. A convincing break below the recent trading range should pave way for continuation of the pair's near-term depreciating move towards 0.9855-50 horizontal support ahead of 0.9815-10 support (March 27 low). 

On the flip side, any attempts to move higher might continue to confront strong hurdle near 0.9960 region, which if conquered seems to trigger a short-covering rally immediately towards parity mark ahead of its next hurdle near 1.0020-25 region.