- A good recovery in USD demand pushed USD / CHF to multi-day highs on Tuesday.
- Stronger US CPI figures bolstered the Fed’s aggressive expectations and acted supportive.
- The nervousness of COVID-19 benefited the safe haven CHF and could limit the rise of the pair.
The pair USD/CHF it jumped to multi-day highs during the early days of the American session, and the bulls are now expecting a sustained move past the 0.9200 level.
The pair gained strong positive traction on Tuesday and built on the previous day’s modest rebound from the 0.9130 area, or near four-week lows. The rally was solely sponsored by a good recovery in demand for the US dollar, although concerns about new variants of COVID-19 could limit gains for the USD / CHF pair.
The USD remained supported by expectations that the Fed is ready to tighten its monetary policy stance earlier than expected. This was bolstered by warmer-than-expected US consumer inflation figures on Tuesday, which showed the headline CPI accelerating to a 5.4% year-on-year rate in June from 5.0% previously.
This, to a greater extent, helped offset a softer tone around U.S. Treasury yields.However, concerns about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus underpinned the safe haven Swiss franc. This, in turn, kept any further gains for the USD / CHF pair limited.
So it will be wise to wait for some solid follow-up buying before traders start to position themselves for any further appreciation moves. However, the USD / CHF pair, for now, appears to have stalled its recent sharp pullback from the three-month highs, around the 0.9275 region, touched earlier this month.
Technical levels
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