USD/CHF struggling to build on early recovery move from 6-month lows

The USD/CHF pair trimmed some of its tepid recovery gains and retreated around 20-pips from session high level of 0.9765 touched in the past hour.

The pair failed to build on early up-move, despite of a goodish US Dollar recovery and hangs closer to six-month lows touched during Asian session on Monday. The prevalent cautious sentiment, against the backdrop of latest missile test by N. Korea over the weekend and political uncertainty in the US, remains supportive for the Swiss Franc's safe-haven appeal. Hence, a mildly weaker opening in the European equity market has been a key factor for the pair's retracement in the past hour or so. 

   •  USD: Trump filled event risks this week means the $ could stay defensive - ING

Meanwhile, rising bets for an eventual Fed rate-hike action in June, with CME group's FedWatch tool pricing in over 75% probability of such an action, was seen extending some support and has helped the pair to hold in positive territory, at least for the time being. 

Later during the NY session, speeches from various FOMC members would now be looked upon for fresh insight over the central bank's near-term monetary policy outlook and provide some short-term trading opportunities ahead of the Fed monetary policy meeting minutes, due for release on Wednesday.

Technical levels to watch

A follow through retracement below 0.9730-25 area might turn the pair vulnerable to break through the 0.9700 handle and head towards testing its next support near 0.9675-65 region. On the upside, momentum above session tops resistance near 0.9765 level could get extended towards the 0.9800 handle, but any subsequent up-move might now be capped at 0.9825 resistance area.