- USD / CHF gained traction for the third day in a row amid widespread USD strength.
- Rising US bond yields continued to act as a tailwind for the USD and remained encouraging.
- Risk aversion benefited the safe haven CHF and limited the upside for the pair.
The pair USD/CHF it maintained its offered tone during the first half of the European session, although it has fallen a few pips from the highs of a week touched earlier this Tuesday. The pair was last seen trading around the 0.9275-80 region, up almost 0.25% on the day.
The pair built on last week’s bounce from the 0.9215 support area and gained some follow-up traction for the third day in a row. This also marked the fourth day of a positive move in the previous five and was sponsored by a widespread strength in the US dollar, bolstered by rising US Treasury yields.
In fact, the benchmark 10-year US government bond yield reached its highest level since June 17 amid prospects for an early tightening of policy by the Fed. It is worth remembering that the Fed he hinted that he would start to cut back on bond purchases. Furthermore, the dot plot showed the inclination of policy makers to raise interest rates in 2022.
The support factor, to some extent, was offset by the risk aversion momentum in the markets, which sustained the safe-haven Swiss franc and limited gains for the USD / CHF pair. Investors remain concerned about China Evergrande Group’s unresolved debt crisis. This, together with the intensification of the energy crisis, took its toll on risk sentiment.
The USD / CHF pair, so far, has struggled to advance above 0.9300, so it is wise to wait for some follow-up buying before positioning for more profit. The next relevant hurdle is pegged near the 0.9330-35 region, or the multi-month highs touched last week, which should act as a fundamental point for short-term traders.
Market participants are now looking forward to Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee. This, along with the release of the Conference Board Consumer Confidence Index and US bond yields, will influence the USD. Apart from this, the broader market risk sentiment could give the USD / CHF some boost.
Technical levels
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