- USD/CHF regains positive traction on Wednesday amid the appearance of some buying around the USD.
- High yields on US bonds and the Fed’s aggressive outlook continue to benefit the dollar.
- A modest pullback in equity markets benefits the safe-haven CHF and caps the pair’s upside.
The pair USD/CHF moves higher during the European session on Wednesday, trading around the region of 0.9350 and holding close to their daily highs.
Following the sharp turnaround from the 0.9375 region the previous day, the USD/CHF pair regained positive traction on Wednesday and was seen supported by the appearance of some purchases around the US dollar. The recent rally in US Treasury yields acted as a tailwind for the USD. This, in turn, extended support to the pairalthough the rally lacks bullish conviction.
The sale in the US bond market gained pace after the president of the Fed, Jerome Powell, suggested that the US central bank could take a more aggressive stance to combat inflation. Separately, San Francisco Fed President Mary Daly signaled it was time to undo monetary policy easing, while St. Louis Fed President James Bullard and Cleveland’s Loretta Mester they asked for faster uploads.
The markets rushed to price in a 50 basis point rate hike at the next FOMC meeting and pushed the 10-year US bond yield to the highest level since 2019, helping limit the dollar’s slide. Having said that, a modest pullback in equity markets fueled some safe-haven money flows into the Swiss franc and capped any significant upside in the USD/CHF pair, which justifies the caution of the bulls.
Therefore, it will be prudent to wait for a continuation of strong buying before confirming that the pair has bottomed and positioning for an extension of this week’s bounce from levels below 0.9300. However, the USD/CHF pair has so far managed to hold onto modest intraday gains as investors await Fed Chairman Jerome Powell’s remarks later in the day to spot some short-term opportunities.
USD/CHF technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
