- The risk-on impulse undermined the safe-haven CHF and assisted USD/CHF to gain traction.
- A subdued USD demand held back bulls from placing aggressive bets and capped the upside.
- Rising Fed rate hike bets favours bullish traders and supports prospects for additional gains.
The USD/CHF pair trimmed a part of its intraday gains and was last seen hovering around the 0.9200 mark, up nearly 0.25% for the day.
The pair attracted some buying near the 0.9175-70 region on Wednesday and built on the previous day's bounce from the vicinity of mid-0.9100s, or a near three-week low. The global risk sentiment witnessed a positive turnaround as investors seem convinced that the latest COVID-19 variant would not derail the economic recovery. This was evident from a strong rally in the equity markets, which undermined the safe-haven Swiss franc and provided a modest lift to the USD/CHF pair.
Meanwhile, the US dollar, so far, has struggled to gain any meaningful traction and seesawed between tepid gains/minor losses through the mid-European session. This, in turn, held back traders from placing aggressive bullish bets around the USD/CHF pair and capped the intraday move up. That said, a strong pickup in the US Treasury bond yields, bolstered by rising bets for a more aggressive policy tightening by the Fed, acted as a tailwind for the greenback and the USD/CHF pair.
In fact, the money markets started pricing in the possibility of at least a 50 bps rate hike by the end of 2022 in reaction to the overnight hawkish comments by Fed Chair Jerome Powell. Testifying before the Senate Banking Committee, Powell said that it is appropriate to consider wrapping up the tapering of asset purchases, perhaps a few months sooner. He added that it's time to retire the word transitory and that the risk of persistently higher inflationary pressures has increased.
The fundamental backdrop favours the USD bulls and supports prospects for some meaningful near-term appreciating move for the USD/CHF pair. The positive outlook is reinforced by the fact that bulls have shown some resilience below the very important 200-day SMA, which should now act as a key pivotal point. Hence, a subsequent strength towards an intermediate hurdle near the 0.9230 level, en-route the weekly high around the 0.9270-75 supply zone, remains a distinct possibility.
Market participants now look forward to the US economic docket, featuring the ADP report on private-sector employment and ISM Manufacturing PMI. Traders will further take cues from Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen's joint testimony before the House Financial Services Committee. Apart from this, developments surrounding the coronavirus saga and the broader market risk sentiment might produce some trading opportunities around the USD/CHF pair.
Technical levels to watch
|Today last price||0.92|
|Today Daily Change||0.0020|
|Today Daily Change %||0.22|
|Today daily open||0.918|
|Previous Daily High||0.9267|
|Previous Daily Low||0.9158|
|Previous Weekly High||0.9374|
|Previous Weekly Low||0.9218|
|Previous Monthly High||0.9374|
|Previous Monthly Low||0.9088|
|Daily Fibonacci 38.2%||0.9199|
|Daily Fibonacci 61.8%||0.9225|
|Daily Pivot Point S1||0.9136|
|Daily Pivot Point S2||0.9092|
|Daily Pivot Point S3||0.9027|
|Daily Pivot Point R1||0.9245|
|Daily Pivot Point R2||0.9311|
|Daily Pivot Point R3||0.9355|
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.