- USD / CHF gains strong continuation traction for the second day in a row on Thursday.
- The Fed’s bullish turn continues to prop up the USD and continues to support the pair’s upward move.
- Weaker risk sentiment and the latest SNB policy decision do little to hamper the pair’s continued momentum.
The pair USD/CHF continues to move higher during the European session on Thursday, rising to the 0.9150 region to the highest level since May 6.
The pair has built on the momentum of the previous day past the very important 200-day SMA and gained strong continuation traction for the second day in a row on Thursday. The sudden optimistic Fed lean on Wednesday it pushed the US dollar to nearly two-month highs, which, in turn, has been seen as a key factor that has provided the USD / CHF with a good lift.
It is worth remembering that the Fed said it could raise interest rates at a much faster rate than anticipated previously. The so-called dot chart indicates two rate hikes in late 2023 versus March’s projection of not increasing until 2024. Additionally, seven members see a rate hike or more in 2022 compared to March 4.
The USD bulls do not appear to be affected by a modest decline in US Treasury yields. Even a sharp pullback in equity markets, which tends to prop up demand for the safe-haven Swiss franc, has also failed to hamper the current positive move. The USD / CHF pair maintains its bullish tone after the SNB announce its monetary policy decision.
As expected, the SNB has left the interest rate on demand deposits unchanged at -0.75%. The Swiss National Bank reiterated that CHF is still highly valued and has shown its willingness to intervene in the foreign exchange market when necessary. The SNB has also improved its inflation forecast through 2023, although it has done little to provide any significant boost to the USD / CHF pair.
Market participants are now looking forward to the US economic calendar, with the release of the Philadelphia Fed Manufacturing Index and initial weekly jobless claims. This, along with US bond yields, could influence the dollar. Apart from this, the broader market risk sentiment could generate some short-term opportunities around the USD / HF pair.
US / CHF technical levels
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