- USD / CHF was seen to consolidate its recent gains to a week and a half highs.
- Sustained USD buying continues to act as a tailwind amid risk appetite.
- The bias favors bullish traders and supports the prospects for additional earnings.
The pair USD/CHF it lacked a firm directional bias and ranged from tepid gains to minor losses during the first half of the European session. The pair was last seen trading around the 0.9290 area, just a few pips below the one-and-a-half week highs touched earlier this Wednesday.
The pair, so far, has struggled to take advantage of its gains recorded in the last three trading sessions, although the short-term bias remains firmly skewed in favor of bearish traders. Following a brief consolidation during the first half of trading action on Wednesday, the US dollar regained positive traction and soared to the highest level since early November 2020. This, in turn, should continue to act as a tailwind. for the USD / CHF pair. and help limit downsides.
The USD continued to get some support from expectations of an early Fed policy tightening. It’s worth remembering that last week the Fed hinted that it could start rolling back its massive pandemic-era stimulus as soon as possible. like november. Additionally, the dot plot indicated the inclination of lawmakers to raise rates in 2022. Other than this, a solid rally in equity markets should undermine the safe-haven Swiss franc and help the USD / CHF regain positive traction.
Therefore, the price movement within the range could still be classified as a consolidation phase and deserves some caution before confirming that the USD / CHF pair has peaked in the near term. Any significant drop could still be seen as a buying opportunity near the 0.9260-50 region, which should now act as a key point for short-term traders. The stage appears to be set for a move back towards the challenging yearly lows, around the 0.9330-35 region touched early last week.
Market participants now await the release of pending US home sales data. However, the focus will be on Fed Chairman Jerome Powell’s comments at the ECB Central Bank Forum. This, along with US bond yields, could influence USD price dynamics. Apart from this, the broader market risk sentiment could also give the USD / CHF some boost.