USD/CHF trades with modest gains around 0.9200 mark, upside remains capped ahead of NFP

• USD/CHF edged higher for the second successive day, though lacked follow-through buying.
• The cautious market mood benefitted the safe-haven CHF and capped gains amid softer USD.
• An uptick in the US bond yields helped limit losses for the USD and the pair ahead of the NFP.

The USD/CHF pair retreated a few pips from the daily swing high and was last seen trading with only modest intraday gains, around the 0.9200 round-figure mark.

Following the previous day's turnaround from the 0.9235 area, the USD/CHF pair gained some positive traction for the second successive day on Friday, though the uptick lacked bullish conviction. The US dollar languished near a two-and-half-week low and was pressured by the post-ECB rally in the shared currency. Apart from this, the cautious market mood benefitted the safe-haven Swiss franc and kept a lid on any meaningful upside for the major.

That said, some follow-through uptick in the US Treasury bond yields helped limit any deeper losses for the greenback and acted as a tailwind for the USD/CHF pair. Investors also seemed reluctant to place aggressive bets and preferred to wait for the release of the closely-watched US monthly employment details, due later during the early North American session. The data will influence the USD price dynamics and provide a fresh impetus to the USD/CHF pair.

The headline NFP print is expected to show that the US economy added 150K jobs in January, down from the 199K reported in the previous month. . Several labour market indicators, including the awful ADP report on Wednesday, have been suggesting trouble in the US labour market at the start of 2022. This, in turn, points to a considerable risk of a negative surprise, which should exert pressure on the already weaker USD and prompt fresh selling around the USD/CHF pair.

Hence, it will be prudent to wait for a strong follow-through buying before confirming that the recent sharp pullback from the vicinity of mid-0.9300s, over a two-month high has run its course. On the flip side, the very important 200-day SMA, currently around the 0.9165 region, should act as a pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders. This, in turn, will set the stage for a further near-term depreciating move.

Technical levels to watch