- A broad-based USD strength helped USD / CHF gain traction for the second day in a row.
- Concerns about the tightening of the Fed, a strong recovery in US bond yields continued to prop up the USD.
- The strong opening in the US equity markets weighed on the safe haven CHF.
The pair USD/CHF it rose to highs of more than a week during the early days of the American session, although it quickly lost a few pips thereafter. The pair was last seen trading around the 0.9215 region, still up almost 0.25% on the day.
The pair built on modest gains the day before and rose for the second consecutive session on Tuesday. The permitted rally pushed the USD / CHF pair toward the more than two-month highs touched last week and was sponsored by a general strength in the US dollar.
Despite mixed signals on US inflation, investors have gambled on the prospects of an early move by the Fed to tighten its monetary policy. This, coupled with a strong recovery in US Treasury yields, sustained the dollar and provided a good boost to the USD / CHF pair.
The bulls were also inspired by a strong opening in US equity markets, which tends to dent demand for traditional safe-haven currencies, including the Swiss franc. That said, fears about the spread of the highly infectious Delta variant of the coronavirus limited gains for the USD / CHF pair.
Market participants are now looking forward to the release of the Conference Board’s US Consumer Confidence Index, which could influence USD price dynamics. Traders will follow the broader market risk sentiment indications for some USD / CHF trading opportunities.
The key focus, however, will remain Friday’s release of closely watched US monthly employment data. The popularly known NFP report will play a key role in boosting the dollar in the short term and will help determine the next leg of a directional move for the USD / CHF pair.
Technical levels
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