USD/CHF recovers lost ground, retakes 1.0100 handle and beyond

Having posted a session low at 1.0080 region, the USD/CHF pair reversed all of its early losses and has now filled the weekly bearish gap.

Currently trading in neutral territory, around 1.0140 region, a fresh bout of US Dollar buying interest in the past hour assisted the pair to recover its lost ground and regain control over 1.0100 handle. Moreover, a sharp recovery in crude oil prices in wake of news that Saudi Arabia offered to cut production by 4.5% if Iran freezes its production at 3.8mbpd was seen driving flows away from traditional safe-haven currencies - like the Swiss Franc, and is further supportive of the pair's recovery from 4-day low touched during early European session on Monday.

Next in focus would be ECB President Mario Draghi's testimony, which might trigger a fresh bout of volatility in the FX market and eventually provide some impetus for the USD/CHF major. However, the broader trend would remain dependent on this week's important US macro releases - revised Q3 GDP print and November monthly employment details (NFP), which help investors to evaluate possibilities and timing of the next Fed rate-hike action, beyond December meeting, and determine the pair's trajectory in the near-term.

Technical outlook

Yann Quelenn, Market Analyst at Swissquote Bank SA, notes, "USD/CHF rally has faded. The technical structure remains nonetheless bullish. We monitor key support given at the parity. Hourly resistance lies at 1.0192 (24/11/2016 high). Expected to see further weakness."

He further adds, "In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015."