- USD/CHF gained strong positive traction on Tuesday and jumped to a near two-week high.
- A positive opening across the European equity markets undermined the safe-haven CHF.
- Rebounding US bond yields benefitted the USD and remained supportive of the move up.
The USD/CHF pair scaled higher through the early European session and shot to a nearly two-week high, around the 0.9180 region in the last hour.
The pair built to the overnight modest bounce from the 0.9100 area and gained strong positive traction on Tuesday, taking along some short-term trading stops near the very important 200-day SMA. A positive opening around the European equity markets undermined the safe-haven Swiss franc. This, along with modest US dollar strength, provided a goodish lift to the USD/CHF pair.
The greenback remained well supported by expectations that the Fed will tighten its policy faster than anticipated. In fact, the markets seem convinced that the Fed will begin raising interest rates in March and have been pricing in a total of four hikes in 2022. Adding to this, rebounding US Treasury bond yields further assisted the USD to hold steady near a two-week high.
Apart from this, the intraday momentum could further be attributed to some buying above a technically significant 200-day SMA. Some follow-through buying beyond the 0.9200 mark will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The USD/CHF pair might then accelerate the momentum towards the 0.9250-0.9255 horizontal resistance.
It, however, remains to be seen if bulls are able to capitalize on the move or opt to lighten their bets heading into the FOMC monetary policy meeting, starting this Tuesday. The Fed is scheduled to announce its decision on Wednesday, which will play a key role in influencing the near-term
USD price dynamics and provide a fresh directional impetus to the USD/CHF pair.
In the meantime, traders will take cues from the release of the Conference Board's US Consumer Confidence Index, due later during the early North American session. This, along with the US bond yields, will drive the USD demand. Apart from this, the broader market risk sentiment should further produce some short-term trading opportunities around the USD/CHF pair.
Technical levels to watch
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