- USD/CHF attracts fresh buying on Thursday, though rally lacks bullish conviction.
- The Fed’s aggressive outlook benefits the USD and supports the pair’s upward move.
- The stability in the stock markets and the decision of the SNB to maintain the status quo weigh on the CHF.
- The lack of continuation purchases warrants caution before positioning yourself for additional gains.
The pair USD/CHF maintains its modest intraday gains during the first half of the European session on Thursday. At time of writing, the pair is trading at 0.9318, up 0.14% on the day.
The pair once again showed some resilience below the 0.9300 round level and attracted some buying at lower levels on Thursday amid broad US dollar strength. Recent statements from a number of influential FOMC members, including Fed Chairman Jerome Powell, fueled market expectations for a rate hike of 50 basis points at the next meeting of monetary policy in May. This was reinforced by elevated US Treasury yields, which in turn continued to act as a tailwind for the USD.
Conversely, the Swiss National Bank (SNB) left its ultra-easy monetary policy unchanged at the end of the monetary policy meeting March on Thursday and kept interest rates at -0.75%. In addition to this, the SNB reiterated its commitment to carry out monetary interventions to curb the rise of the national currency. This, coupled with signs of stability in equity markets, weighed on the safe-haven Swiss franc and offered additional support to the USD/CHF pair.
The rebound, however, lacked any continuation buying which could prevent the bulls from opening aggressive positions around the USD/CHF pair. That said, the repeated failures to find acceptance below the 0.9300 level suggests that the recent pullback from the 0.9460 zone, or the highest level since April 2021, is over. Sustained strength beyond the 0.9355-0.9360 zone will reaffirm the outlook and set the stage for significant gains.
however, investors seemed reluctant and prefer to wait for new developments around the war between Russia and Ukraine. US President Joe Biden will meet with NATO and European leaders in an emergency summit on the Ukraine war. Incoming news will weigh on risk sentiment and boost demand for the USD, which in turn should provide some lift to the USD/CHF pair.
USD/CHF technical levels
Source: Fx Street
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