- USD/CHF holds steady above the 0.9600 mark and looks to build on the overnight strong move up.
- Bets for more aggressive rate hikes by the Fed favour the USD bulls and reaffirms the positive bias.
- Signs of stability in the equity markets undermine the safe-haven CHF and offer additional support.
The USD/CHF pair consolidates the overnight strong rally of over 150 pips from a nearly one-month low and oscillates in a range, above the 0.9600 mark through the early European session on Wednesday.
The US dollar edges lower and erodes a part of Tuesday's stronger US consumer inflation data-inspired rally amid a modest downtick in the US Treasury bond yields. This, in turn, is seen as a key factor acting as a headwind for the USD/CHF pair. That said, firming expectations that the Federal Reserve will keep raising interest rates at a faster pace to tame inflation should help limit any meaningful downfall for the US bond yields and the greenback.
In fact, the markets have started pricing in the possibility of a full 1% rate hike in the September FOMC meeting and another supersized 75 bps increase in November. The bets were reaffirmed by the US CPI report and lifted the yield on rate-sensitive two-year US government bonds to an almost 15-year high. Apart from this, signs of stability in the financial markets could undermine the safe-haven Swiss franc and offer some support to the USD/CHF pair.
The fundamental backdrop seems tilted in favour of bullish traders and suggests that the recent sharp pullback from the 0.9870 area or a nearly two-month high has run its course. Hence, any meaningful dip could now be seen as a buying opportunity and remain limited. The USD/CHF pair seems poised to climb further towards reclaiming the 0.9700 round-figure mark although the 50-day SMA at 0.9640 is a key obstacle for it to overcome before questing higher. Traders now look forward to the US Producer Price Index (PPI) for a fresh impetus.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD rises to daily tops past 1.0800 post-NFP
The selling bias in the Greenback gathers extra pace on Friday after the US economy created fewer jobs than initially estimated in April, lifting EUR/USD to the area of fresh peaks above 1.0800.
GBP/USD surpasses 1.2600 after disheartening US Payrolls
The resumption of the downward pressure in the US Dollar motivates GBP/USD to extend its earlier advance to the area beyond 1.2600 the figure in the wake of the release of US NFP.
Gold climbs to new highs above $2,300 on poor NFP prints
The precious metal maintains its bullish stance and breaks above the $2,300 barrier on Friday after US Nonfarm Payrolls showed the economy added fewer jobs than expected during last month.
XRP edges up after week-long decline as Ripple files letter in reply to SEC’s motion
Ripple filed a letter to the court to support its April 22 motion to strike new expert materials. The legal clash concerns whether SEC accountant Andrea Fox's testimony should be treated as a summary or expert witness.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.