- USD / CHF bounced well from 0.9100 on Monday, or a nearly two-month low.
- Risk appetite undermined the CHF – safe haven and acted as a tailwind for the pair.
- Rising US bond yields benefited the dollar, contributing to the intraday short hedging move.
The pair USD/CHF it trimmed a portion of its intraday gains and was last seen trading around the 0.9135 region heading into the American session.
A combination of support factors helped the USD / CHF to defend itself and attract some buying around 0.9100 on Monday. Despite the continued rise in new COVID-19 cases, investors remain optimistic about signs that the Omicron variant could be less severe than feared and unlikely to derail the economic recovery. This was evident by a generally positive tone in equity markets, which undermined the safe-haven Swiss franc.
On the other hand, the US dollar got some support thanks to a new boost in US Treasury yields and reversed a significant part of Friday’s slide to the lowest level since November 30. government bonds soared to 1.54%, again closer to a nearly a month high hit last week. This, coupled with the aggressive outlook from the Fed, also acted as a tailwind for the dollar and provided a good boost to the USD / CHF pair.
The rally, however, lacked bullish conviction and remained limited amid quiet Christmas trading. Traders also seemed reluctant to make aggressive bets, preferring to wait on the sidelines before the important macroeconomic data from the US scheduled for the start of a new month. This week’s US economic agenda highlights the release of the ISM PMIs and the ADP report. However, the market will focus on Friday’s monthly jobs report (NFP), which will be closely monitored.
Meanwhile, US bond yields will play a key role in influencing USD price dynamics and will provide some boost to the USD / CHF pair. Aside from this, traders will be guided by developments surrounding the coronavirus saga and overall market risk sentiment to seize some short-term opportunities. However, the pair, for now, appears to have stalled its recent downward trajectory, although any significant rally still seems elusive.
Technical levels
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