USD/CHF clings to five-month high above 0.9300 amid sour sentiment

• USDCHF bulls take a breather after three-week uptrend to refresh multi-day top.
• Risk appetite worsens amid pre-Fed cautious, virus-led challenges to economic growth, fears concerning China.
• Bank holidays in China, Japan could restrict intraday moves.

USD/CHF remains sidelined around 0.9320 after poking the April 2020 tops during Monday’s Asian session. In doing so, the quote keeps the previous week’s upside break of the key resistance line, now support, but awaits more strength to tackle the key SMA hurdle amid a quiet start to the key week.

Worsening market sentiment underpins the US dollar’s safe-haven demand and provides a tailwind to the USD/CHF bulls. However, the Swiss currency’s (CHF) risk-safety allure test the upside momentum amid a light calendar and off in China, as well as Japan.

US Dollar Index (DXY) rose to the highest since August 23 on Friday as the risk-off mood escalates. The COVID-19 fears and chatters that the US Federal Reserve (Fed) will hint tapering during this week’s Federal Open Market Committee (FOMC) could be highlighted as the main catalysts behind the moves. Additionally, escalating tensions between China and the Western allies, namely the US, Australia and the UK, also weigh on the market sentiment and underpin the US dollar.

Recently, concerns over the stimulus and debt limit gained attention after Axios reported that US Senator Manchin delay President Joe Biden’s spending package vote to 2022. On the contrary, US House Speaker Pelosi said to expect a bipartisan approach to address the debt limit, per Reuters.

Elsewhere, the virus woes escalate and challenge the economic growth momentum but the Fed is likely teasing taper announcements this week.

Amid these plays, the US Treasury yields remained firmer and the Wall Street benchmarks closed in the red by the end of Friday while the S&P 500 Futures drop 0.29% intraday at the latest.

Given a lack of major data/events, except for Canada Federal Elections, USD/CHF may remain lackluster around the multi-day top with eyes on the Fed decision.

Technical analysis

Despite crossing a 1.5-year-old descending trend line, around 0.9265 by the press time, USD/CHF bulls need to piece the 100-week SMA level of 0.9330 before heading towards a downward sloping resistance line from September 2019 near 0.9370.