- USD/CHF gets aggressive bids on Thursday and is up more than 200 pips from the daily low.
- The 50 basis point SNB seems to have disappointed traders and weighs on the Swiss franc.
- The dollar trims part of the intraday retracement losses and continues to support the move higher.
The pair USD/CHF receives aggressive offers after the Swiss National Bank announced its monetary policy decision earlier this Thursday and continues to climb higher until the middle of the European session. The momentum lifts the pair to a fresh 2-week high, though it stalls ahead of the 0.9860-0.9870 supply zone tested in August and earlier this month.
The SNB raises its official interest rate by 75 basis points, as expected, although some market participants had anticipated a more aggressive 100 basis point hike before the decision. This turns out to be a key factor weighing on the Swiss franc and causing aggressive short hedging around the USD/CHF pair.
The strong intraday rally carries with it some short-term trading stops located near the 100-day SMA. Further strength and acceptance above 0.9700 fuels some technical buying. This, along with the appearance of some buying in the US dollar, provides an additional boost to the USD/CHF pair and continues to act as support.
The initial market reaction to the news that the Japanese government has intervened in the forex market is fading fast. Aside from this, the more aggressive stance taken by the Fed continues to act as a tailwind for the USD. This, in turn, supports the prospects for further gains for the USD/CHF pair.
However, the bulls would prefer to wait for sustained strength beyond the 0.9860-0.9870 region before positioning themselves for any further appreciation moves. Next, the weekly data on US jobless claims will be released, which could influence the price dynamics of the dollar and give some momentum to the USD/CHF pair.
Technical levels to watch
Source: Fx Street
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