- A combination of factors triggered some hedging shorts around USD / CHF on Monday.
- Alleviating Omicron’s fears boosted investor confidence and undermined the CHF as a safe haven.
- The US dollar was supported by the optimistic expectations of the Fed and the recovery of US bond yields.
The pair USD/CHF it spiked to a four-day high during the early days of the American session, although it quickly lost a few pips thereafter. The USD / CHF pair was last seen trading around the 0.9220 region, up almost 0.45% on the day.
The pair once again showed some resistance below the very important 200-day SMA and attracted new purchases near the 0.9160 area on the first day of a new week. Risk appetite in financial markets undermined the safe haven currency. This, coupled with the sustained buying interest of the US dollar, provided a good boost to the USD / CHF pair.
Reports that Omicron’s patients had only relatively mild symptoms eased fears about the potential economic consequences of the new coronavirus variant and boosted investor confidence. This was evidenced by a generally positive tone in global equity markets, which, in turn, pushed flows away from traditional safe-haven currencies.
On the other hand, the prospects for faster policy tightening by the Fed continued to act as a tailwind for the USD and provided additional boost to the USD / CHF pair. In fact, markets have been weighing the possibility of an eventual May 2022 interest rate hike amid concerns about stubbornly high inflation pressures.
Apart from this, a solid rally in US Treasury yields further benefited the dollar and pushed the USD / CHF pair beyond the 0.9215-20 supply zone. This could be seen as a new trigger for bullish traders, although the lack of strong buying tracking warrants some caution before positioning for any further appreciation moves.
There is no major economic data on market movement to be released in the US, leaving the USD / CHF pair at the mercy of USD price dynamics and overall market risk sentiment. However, the fundamental context supports the prospects for additional short-term gains and a move to test the next relevant hurdle near the 0.9265-70 region.
Technical levels
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