- USD / CHF attracted some buying at the dips near 0.9150 and recovered some of the losses overnight.
- The risk appetite boost undermined the safe haven CHF and continued to support the intraday rally.
- The rally in US bond yields, coupled with optimistic expectations from the Fed, acted as a tailwind for the dollar.
The pair USD/CHF managed to recover around 25 pips from daily lows and moved to the upper end of its daily trading range, around the 0.9175 region during the early days of the American session.
The pair drew some buying at the dips near 0.9150 and for now, this week’s retracement decline from the four-week highs appears to have stalled around the 0.9235 zone touched on Wednesday. A solid rally in global equity markets undermined the safe haven Swiss franc and extended some support to the USD / CHF pair.
The risk impulse triggered a sharp rally in US Treasury yields, which, along with expectations of an imminent Fed phase-down announcement, helped limit the decline in the US dollar. This was seen as another factor that helped the USD / CHF pair gain positive traction and recoup some of the overnight losses.
Investors seem convinced that the Fed will start rolling back its massive pandemic-era stimulus sooner rather than later. Market speculation was further fueled by aggressive comments from various Fed officials this week. Aside from this, Friday’s release of the hotter-than-expected US Producer Price Index favors USD bulls.
According to data released by the US Bureau of Labor Statistics, the main US PPI rose to 8.3% annually in August from 7.8% the previous month. This marked the biggest advance since 12-month data was first calculated in November 2010. On a monthly basis, the PPI slowed to 0.7% from 1% in July.
The fundamental backdrop supports the prospects for additional earnings and a possible move back towards the 0.9200 recovery. Some subsequent purchases could continue to face strong resistance near the 0.9235-40 region, which if decisively cleared will set the stage for an extension of the appreciation move.
Technical levels
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