USD/CHF drops sharply to session low of 0.9920

After rising to nearly 3-month high level of 0.9956, the USD/CHF pair reversed some of its Friday's strong gains and dropped to currently trade at 0.9925 near session low of 0.9920.

The pair has been gaining traction on rising prospects of an imminent Fed rate-hike. On Friday, the pair took cues from the Fed chair Janet Yellen's hawkish comments that further supported the ongoing bullish momentum in the greenback.

On Monday, the pair initially attempted to built on to its Friday's strong gains but failed to extend the momentum after the release of KOF economic indicator that pointed to a positive outlook over the next 6 month for the Swiss economy.

The pair is currently trading -0.23%, but still holding its neck above 0.9900 handle. 

Technical outlook

James Chen, CMT, Chief Technical Strategist at CityIndex notes, "USD/CHF has been rising sharply since its early May lows below 0.9500 support. That low was accentuated by a clear “hammer” candle pattern, which hinted at a potentially likely turn to the upside. During the course of the rise from that low, USD/CHF has broken out above major prior resistance levels, including, most recently, the 0.9800 level. From there, the currency pair rose further to break out above its key 200-day moving average. After the breakout, the past week has seen a tight consolidation just above that moving average. With further dollar strength above 0.9800 in anticipation of a summer rate hike by the Fed, USD/CHF could be pushed up to parity (1.0000) and higher from its current consolidation around 0.9900. Further upside resistance targets above parity reside at 1.0100 and then 1.0300. Any return below the noted 0.9800 support/resistance level, however, could lead to a breakdown of the current recovery."