USD/CHF corrects after two days of strong gains to one-month high

The USD/CHF pair eroded part of previous session's strong gains to one-month highs and has now corrected to an important resistance break, now turned support, near 100-day SMA region.

The US President Donald Trump's abrupt decision to fire FBI Director James Comey seems to have triggered a modest uptick in global risk aversion. The same is being reaffirmed by a sharp pull-back in the US treasury bond yields, which undermined the US Dollar demand and was seen weighing on the major. 

The risk-off mood, as depicted by negative trading sentiment surrounding European equity markets, further boosted the Swiss Franc's safe-haven appeal and prompted traders to take some profits off the table, especially after an up-surge of around 150-pips in just three trading sessions. 

The pair has now snapped three consecutive days of winning streak, but the pull-back would still be categorized as corrective following a strong break through important moving averages (200-day and 100-day SMAs). Hence, it would be prudent to wait for a follow through selling pressure before confirming that the pair could have topped out in the near-term.

Today's relatively lighter US economic docket, featuring the release of export / import price index, would now be looked upon for some short-term trading impetus later during the NA session.

Technical levels to watch

A follow through retracement below 1.0040 region (100-day SMA) could drag the pair back below the parity mark towards testing an important horizontal resistance turned support near 0.9990-85 zone. On the upside, 1.0075 level now seems to have emerged as immediate resistance, above which the pair seems all set to head towards reclaiming the 1.0100 handle before heading towards its next hurdle near 1.0135-40 region.