USD/CHF holds steady around 0.9130 area as traders keenly await the US NFP report

• USD/CHF ticks higher during the Asian session on Friday and snaps a two-day losing streak.
• The Fed’s hawkish outlook, elevated US bond yields underpin the USD and act as a tailwind.
• Investors keenly await the US NFP report before positioning for a firm near-term direction.

The USD/CHF pair finds some support near the 0.9120 region during the Asian session on Friday and for now, seems to have stalled this week's corrective pullback from its highest level since March 22. Spot prices, however, remain confined in a familiar range held over the past two weeks or so, awaiting a fresh catalyst before the next leg of directional move.

Hence, the market focus will remain glued to the closely-watched US monthly employment details, popularly known as the NFP report, due later today. The US economy is expected to have added 170K jobs in September, less than the 187K in the previous month, while the jobless rate is anticipated to tick down from 3.8% to 3.7% during the reported month. The crucial data will play a key role in influencing market expectations about the Federal Reserve's (Fed) future rate-hike path, which, in turn, will drive the US Dollar (USD) and provide some meaningful impetus to the USD/CHF pair.

Heading into the key data risks, growing acceptance that the Fed will stick to its hawkish stance helps limit a two-day-old US Dollar (USD) retracement from the YTD peak and acts as a tailwind for the major. In fact, the markets have been pricing in the possibility of one more rate hike by the end of this year. Moreover, the US macro data remains consistent with expectations of solid growth in the third quarter and supports prospects for further policy tightening by the Fed. This remains supportive of elevated US Treasury bond yields, underpinning the USD and lending support to the USD/CHF pair.

The aforementioned fundamental backdrop, along with the recent breakout through a technically significant 200-day Simple Moving Average (SMA), suggests that the path of least resistance for the USD/CHF pair is to the upside. Hence, any immediate market reaction to the disappointing US jobs data is more likely to be limited and might still be seen as a buying opportunity. However, it will still be prudent to wait for sustained strength and acceptance above the 0.9200 mark before traders start positioning for an extension of the recent strong uptrend witnessed over the past three months or so.

Technical levels to watch