USD/CHF holds firm above 0.9900, near last week highs

• US Dollar consolidates around 1-month highs against the Swiss franc but remains limited below 0.9950. 
• EUR/CHF turns to the downside, supporting the Swiss franc. 

The Swiss franc is falling modestly against the US dollar on Monday but is up versus other European currencies amid a sharp slide in Chinese markets and also amid higher Italian bond yields. 

The USD/CHF pair approached the key support area of 0.9950 after the beginning of the US session but lost strength and pulled back. As of writing was trading at 0.9930/32, up less than 20 pips and moving within Friday’s price range as it continues to consolidate at the highest level in six weeks, firm above 0.9900. 

Chinese stocks lost almost 4% on average today, triggering risk aversion and supporting the demand for the US dollar. Regarding the Swiss franc, EUR/CHF turned to the downside today, breaking relevant technical level and so far, showing no signs of a rebound like what happened last week, when sharp dips were followed by stronger rebounds.  The ongoing tensions between the European Union and Italy over the budget pushed Italian bond yields to the upside and weakened the euro. 

USD/CHF Levels to watch 

The pair continues to show an upside bias but the upside lost momentum on Friday after being rejected from above 0.9950. A consolidation above  0.9950 could lead to a test of the strong resistance seen at 0.9990. A break higher would expose parity and signal more gains ahead. 

On the flip side, immediate support is the 0.9900 area. Further corrective moves should be seen with a slide under 0.9900/0.9890 with a target at 0.9860.