USD/CHF continues to gain ground and consolidates above the 100-day SMA

• USD/CHF rose to monthly highs since July, towards 0.8920.
• The US ISM Services PMI posted a strong rise in August.
• Aggressive Fed line bets and rising US yields make USD attractive gains.

USD/CHF bulls continue to gain momentum and rallied towards the 0.8930 zone, its highest level since early July. The dollar is one of the most bullish values ​​of the session, since solid data from the services sector was published, which fueled the hawkish bets of the Federal Reserve (Fed). On the Swiss side, nothing relevant will be published today, and the focus will be on Friday’s August unemployment figures.

The US ISM services PMI came in at 54.5 points, above the consensus of 52.5 and the previous reading of 52.7 points. The services sector keeps the US economy afloat and is the last man standing globally, as European figures were weak on Tuesday.

With the Federal Reserve (Fed) expecting the cooling economy to help lower inflation, the strong economic numbers reinforce the case for a further hike this year. In this sense, the one-year yields in the US are rising strongly, and the 2-year yield is back at 5%, with a daily rise of 2.40%. According to CME’s FedWatch tool, this rise in bond yields indicates that the odds of a 25 basis point (bp) rise have risen to 44% from almost 35% in November and December. These hawkish bets benefit the greenback, and its DXY index rose significantly after the release above 105.00.

For the remainder of the session, investors will closely monitor the Fed’s Beige Book, an important indicator of US economic activity.

USD/CHF Levels to Watch

Looking at the daily chart, it is clear that USD/CHF is bullish in the short term. The Relative Strength Index (RSI) is comfortably above its midline in positive territory, showing a bullish trajectory. The green bars on the moving average convergence divergence (MACD) histogram reinforce the bullish momentum. Furthermore, the pair is above the 20- and 100-day SMAs, but below the 200-day SMA, which suggests that the bulls are commanding the bears in 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