USD/CHF bulls retain control near multi-week high, await sustained move beyond 0.9800

• USD/CHF gained traction for the eighth straight day and climbed to a fresh multi-week high.
• Hawkish Fed expectations continued lending support to the USD and provided a goodish lift.
• The risk-off environment underpinned the safe-haven CHF and capped gains for spot prices.

The USD/CHF pair prolonged its nearly two-week-old uptrend from sub-0.9500 levels and edged higher for the eighth successive day on Monday. The momentum lifted spot prices to a three-and-half-week high during the early part of the European session, with bulls still awaiting sustained strength beyond the 0.9800 mark.

The US dollar attracted fresh buying on the first day of a new week and inched back closer to a two-decade high touched on Friday amid hawkish Fed expectations. In fact, the markets seem convinced that the US central bank would retain its aggressive policy tightening path to combat stubbornly high inflation. The bets were reaffirmed by the FOMC minutes released last Wednesday, indicating that another 50 or 75 bps rate hike is likely at the July meeting.

Friday's upbeat US monthly jobs report (NFP), which showed that the economy added 372K jobs in June, reinforced faster Fed rate hikes and continued underpinning the greenback. This, in turn, was seen as a key factor that acted as a tailwind for the USD/CHF pair. That said, the prevalent risk-off environment offered some support to the safe-haven Swiss franc, which held back bulls from placing aggressive bets around the USD/CHF pair and capped the upside at least for now.

Investors remain concerned that rapidly rising interest rates and tightening financial conditions would pose challenges to global economic growth. Apart from this, the ongoing Russia-Ukraine war and the latest COVID-19 outbreak in China have been fueling recession fears. This makes it prudent to wait for sustained strength beyond the 0.9800 round-figure mark before traders start positioning for an extension of the USD/CHF pair's recent strong bullish trajectory.

The market focus now shifts to the release of the latest US consumer inflation figures, due on Wednesday. This week's US economic docket also features the release of monthly Retail Sales data and Prelim Michigan Consumer Sentiment on Friday. The data would influence the near-term USD price dynamics and provide a fresh impetus to the USD/CHF pair. In the meantime, traders might take cues from the broader market risk sentiment to grab short-term opportunities.

Technical levels to watch