- USD / CHF is moving higher for the third day in a row and is approaching a two-month high again.
- The Fed’s optimistic outlook continues to prop up the USD and support the pair’s upward move.
- A positive risk sentiment weighs on the safe-haven CHF and extends additional support to the pair.
The pair USD/CHF moves higher during the first half of the European session on Wednesday, holding firm around the region of 0.9220-25.
After the modest pullback the day before, the USD / CHF pair has captured some new buying on Wednesday and has re-approached the two-month highs touched last week. This marks the third day in a row of positive movement and is due to a combination of factors such as a modest US dollar strength and underlying bullish sentiment in stock markets.
The dollar has remained supported by the speculation that the Fed will tighten its monetary policy if price pressures continue to intensify. Market expectations were further fueled by comments from Richmond Federal Reserve Chairman Thomas Barkin, saying the Fed has made substantial progress toward its inflation target to begin cutting asset purchases.
The USD has also been supported by the upbeat US consumer confidence index Tuesday, which spiked to a new pandemic high in June. The data pointed to growing optimism and further boosted investor sentiment. This, in turn, has weighed on traditional safe-haven currencies such as the Swiss franc and provided additional support for the USD / CHF pair.
Market participants are now awaiting the US economic calendar, which includes the release of the ADP report on private sector employment, Chicago PMI and pending home sales. This, along with US bond yields, could influence USD price dynamics. Investors could continue to take cues from broader market risk sentiment to seize some short-term opportunities around USD / CHF.
The key focus of attention, however, will remain on Friday’s monthly US NFP employment data. The report could influence the Fed’s monetary policy outlook, which will play a key role in the short-term USD price action and could help investors determine the next directional move for the USD / CHF pair.
Technical levels to observe
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