USD/CHF rallies hard to fresh session tops, around 0.9765

   •  Reviving USD demand prompts some short-covering move.
   •  Fading safe-haven demand provides an additional boost.
   •  Traders now await US ISM PMI and FOMC meeting minutes.

The USD/CHF pair staged a strong recovery on Wednesday and is currently placed at fresh session tops, around the 0.9760-65 region.

The pair found some support near the 0.9700 handle and has now recovered over 60-pips from the 0.9700 handle, or 3-month lows touched in the previous session. A goodish pickup in the US Dollar demand prompted some short-covering and triggered the initial leg of up-move. 

Meanwhile, a fresh wave of global risk-on trade, as depicted by strong gains across European equity markets, was also seen weighing on the Swiss Franc's safe-haven appeal and provided an additional boost to the pair's recovery move. 

Traders even shrugged off today's better-than-expected SVME PMI print for Dec., coming in at 65.2 as against 64.6 expected and 65.1 previous, with a bout of short-covering acting as an exclusive driver of the pair's strong recovery move on Wednesday.

It, however, remains to be seen if today's up-move is backed by any genuine buying or is just led by short-covering, from near-term oversold conditions and following the recent slump of over 200-pips since last Wednesday. 

As Jim Langlands, Principal at FX Charts writes: "The dailies are beginning to look heavy and so in the short term, selling rallies at the support-turned-resistance, at 0.9780 would seem to be the plan today."

Traders would now take short-term cues from today's release of US ISM manufacturing PMI, while the key focus would remain on the December FOMC meeting minutes, due for release later during the US trading session.

Technical levels to watch

Immediate resistance remains near the 0.9785 region (important moving averages confluence area), above which the pair is likely to surpass the 0.9800 handle and head towards testing 0.9845-50 supply zone.

On the flip side, 0.9735 level now becomes an immediate support to defend and is closely followed by the 0.9700 handle, which if broken would turn the pair vulnerable to slide further towards 0.9640 horizontal support.