USD/CHF gains further ground and consolidates above the 100-day SMA

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• USD/CHF rose to monthly highs since July, towards 0.8920.
• ISM Services PMI from the US rose sharply in August.
• Hawkish bets on the Fed and rising US yields make the USD gain appeal.

The USD/CHF’s bulls continue to gain momentum and rose towards the 0.8930 area, it highest level since early July. The USD is one of the top performers in the session as it released strong Service sector data, which fueled hawkish bets on the Federal Reserve (Fed). On the Swiss side, nothing relevant will be released today, and the focus is on Friday’s Unemployment figures from August.

The ISM Services PMI from the US came in higher than expected at 54.5, above the consensus of 52.5 and the previous reading of 52.7. The Services sector is holding the US economy afloat and is the last man standing globally, as the European figures came in weak on Tuesday.

As the Federal Reserve (Fed) expects the economy to cool down to contribute to inflation coming down, strong economic figures strengthen the case for another hike this year. In that sense, US year yields are sharply rising, with the 2-year rate rising back to 5%, seeing a 2.40% daily rise. According to the CME FedWatch tool, this rise in bond yields depicts that the odds of a 25 basis point (bps) hike have risen to 44% from nearly 35% in November and December. Those hawkish bets benefit the USD, and its DXY index rose significantly after the release above 105.00.

For the rest of the session, investors will closely monitor the Fed’s Beige book, an important gauge of the US economic activity.

USD/CHF Levels to watch 

 Analysing the daily chart, it is evident that USD/CHF is bullish in the short term. The Relative Strength Index (RSI) is comfortably settled above its midline in positive territory, exhibiting an upward trajectory. Green bars on the Moving Average Convergence Divergence’s (MACD) histogram reinforce the bullish momentum. Plus, the pair is above the 20 and 100-day Simple Moving Averages (SMAs) but below the 200-day SMA, suggesting that the bulls are in command over the bears on the bigger picture.

 Support levels: 0.8900, 0.8877 (100-day SMA), 0.8850.

 Resistance levels: 0.8950, 0.9000, 0.9030.

USD/CHF Daily Chart