- USD/CHF gained some positive traction on Friday and was supported by a combination of factors.
- The risk-on mood weighed on the safe-haven CHF and was seen as a key factor lending support.
- A modest pickup in the USD demand provided an additional boost and remained supportive.
- Dovish Fed expectations, sliding US bond yields might hold the USD bulls from placing fresh bets.
The USD/CHF pair bounced over 25 pips from daily swing lows and was last seen trading with modest intraday gains, just above mid-0.8900s.
The pair managed to find some support near the 0.8930 region and for now, seems to have stalled the previous day's post-US CPI slide from the vicinity of the key 0.9000 psychological mark. The underlying bullish sentiment – as depicted by a generally positive tone around the equity markets – undermined the safe-haven Swiss franc. This, in turn, was seen as a key factor that acted as a tailwind for the USD/CHF pair.
Apart from this, a modest pickup in the US dollar demand provided an additional lift to the USD/CHF pair and contributed to the latest leg up over the past hour or so. The USD uptick, however, lacked any obvious fundamental catalyst and is likely to remain capped amid the ongoing slide in the US Treasury bond yields. This might hold the USD bulls from placing any aggressive bets and keep a lid on any meaningful upside for the USD/CHF pair.
The US macro data released on Thursday showed that the pace of inflation climbed to a 13-year high in May. That said, investors seem aligned with the Fed's narrative that any spike in inflation is likely to be transitory and that pricing pressures will abate later in the year. This means that the Fed will retain its ultra-lose monetary policy for a longer period and dragged the yield on the benchmark 10-year US bond to its lowest level since early March.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CHF pair has bottomed out and positioning for any near-term appreciating move. Market participants now look forward to the release of the Preliminary Michigan US Consumer Sentiment index for some impetus. Apart from this, the broader market risk sentiment might further produce 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. 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
AUD/USD: Further losses retarget the 200-day SMA
Further gains in the greenback and a bearish performance of the commodity complex bolstered the continuation of the selling pressure in AUD/USD, which this time revisited three-day lows near 0.6560.
EUR/USD: Further weakness remains on the cards
EUR/USD added to Tuesday’s pullback and retested the 1.0730 region on the back of the persistent recovery in the Greenback, always against the backdrop of the resurgence of the Fed-ECB monetary policy divergence.
Gold flirts with $2,320 as USD demand losses steam
Gold struggles to make a decisive move in either direction and moves sideways in a narrow channel above $2,300. The benchmark 10-year US Treasury bond yield clings to modest gains near 4.5% and limits XAU/USD's upside.
Bitcoin price dips to $61K range, encourages buying spree among BTC fish, dolphins and sharks
Bitcoin (BTC) price is chopping downwards on the one-day time frame, while the outlook seen in the one-week period is a horizontal trade. In this shakeout moment, data shows that large holders are using the correction to buy up BTC.
Navigating the future of precious metals
In a recent episode of the Vancouver Resource Investment Conference podcast, hosted by Jesse Day, guests Stefan Gleason and JP Cortez shared their expert analysis on the dynamics of the gold and silver markets and discussed legislative efforts to promote these metals as sound money in the United States.