USD/CHF sits near four-day tops, bulls await a sustained move beyond 0.8900 mark
|- USD/CHF added to the overnight gains and edged higher for the third straight day.
- A modest pickup in the USD demand turned out to be a key factor driving the major.
- Recoverin in the European equities undermined the CHF and remained supportive.
The USD/CHF pair climbed to near one-week tops during the early European session, with bulls now awaiting some follow-through strength beyond the 0.8900 mark.
A combination of supporting factors assisted the pair to build on the previous day's positive move and edge higher for the third consecutive session on Tuesday. The US dollar was back in demand amid roadblocks for additional US stimulus measures, which, in turn, was seen as a key factor that provided a modest lift to the USD/CHF pair.
Republicans raised objections on the expensive price tag of a $1.9 trillion COVID-19 stimulus plan proposed by the US President Joe Biden. Meanwhile, Democratic Majority Leader Chuck Schumer said that a comprehensive deal could be four to six weeks away. The developments raised doubts about the size and the timing for more US financial aid.
Apart from this, a goodish bounce in the European equity markets undermined demand for the safe-haven Swiss franc and provided an additional boost to the USD/CHF pair. The CHF was further weighed down by downbeat government forecast, anticipating negative GDP development in Q1 2021. The Swiss government’s chief economist, however, expected an improvement in the second quarter and said that the economy will get back to its feet quite quickly.
Meanwhile, the upside remains limited, at least for the time being, as investors now seemed reluctant to place aggressive bets ahead of the FOMC monetary policy decision on Wednesday. This will be followed by the Advance US Q4 GDP report, which will play a key role in determining the next leg of a directional move for the USD/CHF pair.
In the meantime, traders are likely to take cues from Tuesday's release of the Conference Board's Consumer Confidence Index, due later during the early North American session. This, along with developments surrounding the coronavirus saga and the broader market risk sentiment, should produce some short-term trading opportunities around the USD/CHF pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.