- A combination of factors lifted USD/CHF to a near two-week high on Friday.
- The Fed’s dovish outlook and elevated US bond yields continued to boost the USD.
- A positive risk tone undermined the safe haven CHF and continued to act as support.
The pair USD/CHF It held its offered tone earlier in the American session and was seen trading at 0.9350, or a two-week high.
Following the previous day’s two-way/no-direction price movement, the USD/CHF pair attracted fresh buying on Friday and continued its recent strong rebound from levels below 0.9200. This marked the fifth day of positive movement in the previous six and was sponsored by a combination of factors. A nice recovery in equity markets undermined the Swiss franc as a safe haven and acted as a tailwind for price amid sustained US dollar buying, fueled by the Fed’s hawkish outlook.
Indeed, the USD index spiked to the key psychological 100 level for the first time in almost two years amid firm expectations that the Fed would tighten monetary policy at a faster pace. The bets were confirmed by the minutes of the FOMC meeting in March, which showed that many participants were prepared to raise interest rates by 50 bps in the coming months. This, coupled with concerns about rising inflationary pressures, continued to support elevated US Treasury yields.
The latest leg up, adding a rally of over 150 pips from last week’s low, comes on the back of bullish resilience below the very important 200-day SMA and supports prospects for further gains. Therefore, further strength beyond the intermediate resistance of 0.9375, heading towards the 0.9400 round level, remains a distinct possibility. The momentum could extend further to retest the yearly high, around the 0.9460 region hit on March 16.
In the absence of major economic releases to move the US market, US bond yields will continue to play a key role in influencing USD price dynamics. Aside from this, traders will be inspired by new developments surrounding the Russia-Ukraine saga. Incoming geopolitical headlines should boost broader market risk sentiment and demand for traditional safe-haven assets, including CHF, which, in turn, should provide some lift to the USD/CHF pair.
Technical levels
Source: Fx Street
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