On Monday, the USD/CHF acquired some bullish momentum, but there was no follow-through purchasing.
The chances of the Fed tightening policy sooner rather than later were dwindling, putting the USD bulls on the defensive.
The safe-haven CHF benefited from the cautious mindset and worked together to limit the gain.
The USD/CHF pair struggled to consolidate on its small intraday gains and retreated roughly 20 pips from daily highs, while it managed to stay above 0.9200.
The pair recovered some of the post-NFP decline from three-month highs on the first day of a new trading week, near the 0.9275 range achieved on Friday. However, the rally stalled due to a lack of follow-through buying and was capped by a little drop in the value of the US dollar.
The market’s concerns about the Fed tightening its monetary policy sooner than expected were alleviated by Friday’s mixed US jobs report. The headline NFP number beat expectations, but was largely offset by an unexpected increase in the unemployment rate, implying that the Fed will hold off on ending asset purchases or raising rates.
This functioned as a headwind for the US dollar. Apart from that, the safe-haven Swiss franc benefited from a cautious tone in the equities markets, which helped to hold any major upside for the USD/CHF pair at bay. Investors also appeared hesitant to make any bold bets due to dwindling liquidity due to the holidays.
The market’s attention now goes to Wednesday’s FOMC policy meeting, which will be scrutinized for hints about the Fed’s near-term policy stance. This will be crucial in influencing near-term USD price dynamics and assisting investors in determining the next leg of the USD/CHF pair’s directional move./n
