- The dollar rebounds from session lows near 0.9900, back above parity.
- Bright macro data from the US has boosted the dollar and Treasuries.
- USD/CHF is approaching major resistance at the 1.0030 area.
The U.S. dollar has recovered previous losses against the Swiss franc in the US session on Tuesday, jumping from levels near 0.9900, back above 1.0000 thanks to a series of better-than-expected US macroeconomic data.
Good US data dampens hopes of a Fed pivot
US manufacturing and labor activity figures beat expectations early on Tuesday, improving investor confidence in the health of the US economy and giving the Federal Reserve room to continue raising rates. aggressively for some time. This sentiment has triggered a knee jerk reaction in the dollar and US Treasuries, pushing them higher from session lows.
US manufacturing activity data has provided a positive surprise, with a better-than-expected performance in October. The ISM PMI slowed to 50.2, better than the 50 expected by the market, while the S&P PMI reported a reading of 50.4, revealing that activity in the sector grew, when the market expected a moderate contraction, at 49.9 for the second consecutive month.
In addition, JOLTS job openings have reported an increase to 10.7 million vacancies in September, compared to 10.2 million in August, instead of the decrease to 10 million expected by the expert. These numbers are consistent with the picture of a tight labor market, despite the Fed’s efforts to cool it down to curb inflation.
All eyes are on the Federal Reserve, which is expected to raise rates by 75 basis points on Wednesday. These figures have eroded the idea that the entity could be forced to slow down its path of monetary normalization in December, as had been pointed out in recent comments by some Fed officials.
USD/CHF – Approaching major resistance at 1.0030
From a technical point of view, the pair has improved its short-term bias, breaking back above the 50-200 hourly SMA in the 0.9970/80 area, to try a new assault on the 1.0030 level (highs of 24.25 October). Above here, the next target would be the 3-year high at 1.0145.
To the downside, the aforementioned 200 hourly SMA at the 0.0970 zone is acting as support so far. Below that, the next potential targets are the 30th Oct low at 0.9945 and the 27th Oct high at 0.9920/25.
Technical levels to watch
Source: Fx Street
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