USD/CHF refreshes two-week tops above 0.99, parity back in sight

  • DXY rises above 97.70 on hopes of government funding to avoid a shutdown.
  • Wall Street stages a modest recovery on Thursday.
  • Investors await Friday's NFP report.

The USD/CHF pair advanced to its highest level since November 21 at 0.9945 on Thursday and is looking to close the day with gains for the 8th time in the last 10 days. As of writing, the pair was trading at 0.9943, adding 0.43% on the day.

DXY dominates the pair's price action

The US Dollar Index, which was able to record gains for the first three days of the week, preserved its bullish momentum on Thursday and rose to 93.78 in the early NA session. Following that move, the index went into a consolidation phase before gaining traction again in the late US afternoon. News of the U.S. government coming close to avoiding a shutdown seems to have provided the latest boost to the greenback. "Legislation to extend funding for the U.S. government through Dec. 22 and avert agency shutdowns on Saturday cleared a procedural hurdle in the House of Representatives on Thursday," Reuters reported in the last hour.

On the other hand, following three days of irregular trading action, major equity indexes in the U.S. started the day on a positive note on Thursday and extended their upside, making it tough for the traditional safe-haven CHF to show resilience against the buck. At the moment, both the Dow Jones Industrial Average and the S&P 500 indexes are up 0.3% while the Nasdaq Composite is gaining 0.6%.

On Friday, investors will be keeping a close eye on the year's last nonfarm payroll report from the United States. "The key, as usual, will be wages: average hourly earnings are forecast to rise 0.3% in the month, while compared to a year earlier, growth in hourly earnings is expected to accelerate to 2.7% in November from 2.4% the previous month. That won't be a shockingly positive reading, but surely an improvement from October's numbers," notes Valeria Bednarik, American Chief Analyst at FXStreet. 

Technical outlook

With today's upsurge, the RSI indicator on the daily graph stretched higher above the 50 mark, suggesting that the bullish momentum is building up. 1.0000 (psychological level) is a critical resistance for the pair and a daily close above that level could open the door for further gains towards 1.0040 (Nov. 1 high) and 1.0095 (May 10 high). On the downside, supports could be seen at 0.9880 (50-DMA), 0.9815 (Nov. 30 low) and 0.9765 (100-DMA). 

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