- USD/CHF regained positive traction on Monday amid an extension of the recent strong USD rally.
- The Russia-Ukraine conflict continued benefitting the USD’s status as the global reserve currency.
- Bulls now await sustained break through a one-week-old trading range before placing fresh bets.
The USD/CHF pair held on to its strong intraday gains through the early European session and was last seen trading near the daily high, around the 0.9215-0.9220 region.
The pair attracted fresh buying on the first day of a new week and for now, seems to have snapped two successive days of the losing streak amid an extension of the recent strong US dollar rally. A further escalation in the Russia-Ukraine conflict turned out to be a key factor that continued benefitting the greenback's status as the global reserve currency.
In fact, Russian forces intensified attacks on Ukraine and increasing Western sanctions also did little to deter Russia’s aggression. Moreover, attempts at a ceasefire to allow civilians to evacuate from the besieged city of Mariupol also seems to have failed. Adding to this, Russian President Vladimir Putin warned that the war in Ukraine would continue.
This, along with modestly upbeat US monthly employment details released on Friday, pushed the key USD Index to its highest level since May 2020. The headline NFP print showed that the US economy added 678K jobs in February, smashing expectations for a reading of 400K. Furthermore, the unemployment rate fell more than anticipated, to 3.8% from 4.0% in January.
The worsening situation in Ukraine should continue to act as a tailwind for the greenback and supports prospects for a further near-term appreciating move for the USD/CHF pair. That said, the recent range-bound price moves witnessed over the past one week or so points to indecision among traders, warranting caution before placing aggressive bullish bets.
In the absence of any major market-moving economic releases from the US, the incoming headline surrounding the Russia-Ukraine saga will continue to drive the USD demand. This, in turn, might provide some impetus to the USD/CHF pair and allow traders to grab some short-term opportunities.
Technical levels to watch
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