USD / CHF rebounds to two-week highs around 0.9035 amid resurgent USD demand

• USD / CHF gained strong positive traction on Thursday amid widespread USD strength.
• Talks about the Fed’s phasing out and the recovery of US bond yields provided some support for the USD.
• The optimistic reports from the US labor market provided additional impetus and acted as support.
• A drop in the US equity markets did not benefit the safe haven CHF or hinder the upward move.

USD buying interest accelerated during the early days of the American session and led the pair USD/CHF to two-week highs, around the 0.9030 region in the last hour.

The pair regained traction on Thursday, and the bulls are now looking to take advantage of momentum beyond the 0.9025-30 supply zone amid a good recovery in US dollar demand. Investors argue over whether surprisingly stronger US economic data could force the Fed to start cutting its bond buying program sooner rather than later. Market concerns were further fueled by a duo of upbeat reports on the US job market.

In fact, the Automatic Data Processor (ADP) reported Thursday that US private sector employers added 978,000 jobs in May. This was much better than the 650,000 anticipated and, to a greater extent, helped offset the downward revision of the previous month’s reading to 654,000 from 742,000 previously reported. Meanwhile, initial weekly US jobless claims fell more than expected to 385,000 for the week ending May 28 from 405,000 previously.

Apart from this, a good recovery in US Treasury yields was seen as another factor underpinning the dollar. The bulls did not appear to be affected and largely ignored a sharp drop in US equity markets, which tends to benefit traditional safe-haven currencies such as the Swiss franc. Therefore, a further move to test the very important 200-day SMA, currently around the 0.9075 region, now seems like a clear possibility.

Technical levels