USD/CHF surges to 200-DMA important hurdle near mid-0.9900s

The USD/CHF pair staged a goodish recovery and jumped back to the very important 200-day SMA, reversing all of Thursday's steep losses to over one-month low.

Currently trading just below mid-0.9900s, the pair's swift up-move on Monday could be attributed to some renewed greenback buying interest. With focus shifting back to the Fed's near term monetary policy outlook, growing prospects for an eventual rate-hike action prompted traders to unwind their bearish USD bets. 

USD: Weak positioning has started to reduce - Westpac

Against the backdrop of Friday's upbeat headline NFP numbers, market participants now seemed convinced that the Fed would move towards raising interest rates as early as its June meeting and eventually underpinned the greenback demand, lifting the key US Dollar Index back closer to the 99.00 handle. 

Even a slight deterioration in investors' risk-appetite, as depicted by a mildly negative sentiment surrounding European equity markets, did little to boost the Swiss Franc's safe-haven appeal and stall the pair's swift recovery of nearly 100-pips from the lowest level since March 28, touched on Friday.

It, however, remains to be seen if the pair is able to build on today's strong recovery move and confirm a bullish break through the very important 200-day SMA hurdle or once again runs through fresh supply around 0.9965 horizontal level.

Technical levels to watch

On the upside, immediate resistance remains near 0.9965 level, above which a fresh bout of short-covering could lift the pair beyond parity mark towards testing its next hurdle near 1.0015-20 region. Alternatively, retracement back below 0.9915-10 support would reaffirm strong supply near 200-day SMA region and turn the pair vulnerable to head back towards its next support near 0.9860-55 region.