USD/CHF retakes 0.9800 handle and beyond amid signs of stability in financial markets

The USD/CHF pair snapped six consecutive days of losing streak and has now recovered back above the 0.9800 handle.

Spot reversed part of previous session's sharp losses to yearly lows and seems to have found some support from a modest recovery in the US treasury bond yields, which tends to underpin the greenback demand. In fact, the key US Dollar Index has rebounded from six-month lows and prompted traders to take some profits off their short positions, especially after the pair's recent slump of over 300-pips in just 5-trading sessions. 

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Adding to this, comments from the SNB Chairman Thomas Jordan, noting that overvalued Swiss Franc and low inflation warrants expansive monetary policy, further collaborated to the pair's sharp spike in the past hour or so to fresh session tops near 0.9820 region.

Against the backdrop of ongoing political turmoil in the US, some visible stability in global financial markets was seen denting demand for traditional safe-haven assets, including the Swiss Franc, and could also be attributed to the pair's recovery move from the lowest level since the US Presidential election. 

Today's US economic docket features the release of weekly jobless claims and Philly Fed Manufacturing Index, but is likely to be overshadowed by intensifying political instability in the world's largest economy.

Technical levels to watch

Any further recovery move is likely to confront immediate resistance near 0.9850 region, above which a fresh bout of short-covering could lift the pair beyond 0.9875-80 intermediate resistance towards testing the 0.9900 handle. On the flip side, weakness back below the 0.9800 mark now seems to find some support near 0.9780 level, which if broken should pave way for continuation of the pair's near-term bearish trajectory towards 0.9740-35 horizontal support ahead of the 0.9700 handle.