USD/CHF hits fresh 5-month tops, inching closer to 0.99 handle

  •  Refreshes 5-month tops

  •  Surging bond yields underpin USD demand

  •  Technically poised to extend bullish momentum

After yesterday's volatile swing, the USD/CHF pair regained traction and inched back closer to the 0.9900 handle.

USD regains traction on surging bond yields

A fresh wave of US Dollar buying interest, backed by an upsurge in the US Treasury bond yields remains supportive of the pair's strong up-move through early NA session on Tuesday.

Adding to this, the prevalent risk-on environment, as depicted by positive trading sentiment around equity markets, was seen denting the Swiss Franc's safe-haven demand and further collaborated to the pair's bullish momentum to its highest level since May 22.

The pair's up-move could also be attributed to some technical buying, especially after last week's decisive move beyond the very important 200-day SMA barrier. Hence, a follow through move, even beyond the 0.9900 handle, now seems a distinct possibility.

Next on tap would be the release of flash US manufacturing and services PMI, which would be looked upon for some short-term trading opportunities. Meanwhile, broader market risk sentiment and the US bond yield dynamics would continue to act as key determinants of the pair's movement through NY trading session.

Technical levels to watch

Bulls would be eyeing for a decisive break through the 0.9900 handle, above which a fresh bout of short-covering could lift the pair to its next resistance near the 0.9960-65 region en-route the parity mark. On the downside, 0.9860 horizontal level now seems to act as immediate support, which if broken could drag the pair back towards 200-day SMA, resistance turned support, near the 0.9915 region.