USD/CHF rises to two-week highs near 0.9800 after SNB decision

• USD/CHF soars higher and jumps to a two-week high after SNB policy decision.
• A 75 basis point hike was already priced in and weighs on the CHF in the absence of any aggressive surprises.
• Expectations for a more aggressive rate hike by the Federal Reserve continue to boost the dollar and continue to support the pair’s upward movement.

The pair USD/CHF reverses an intraday drop to the 0.9620 area and hits a two-week high near 0.9800 following the announcement of the monetary policy decision of the Swiss National Bank (SNB). The pair breaks the 100-day SMA barrier and is currently trading around the 0.9775 area.

As expected, the SNB increased the reference interest rate on sight deposits by 75 basis points, to 0.50% from -0.25% previously. This hike comes after a surprise 50 basis point hike at the June meeting, which was the first hike since September 2007. However, Swiss Franc weakens across the board in the absence of an aggressive surprise. Apart from this, the incessant buying of US dollars provides a strong boost to the USD/CHF pair.

Indeed, the dollar index, which measures the greenback’s performance against a basket of currencies, hit a new 20-year high amid a more aggressive stance from the Federal Reserve. Notably The Fed raised interest rates by another 75 basis points on Wednesday and signaled more aggressive rate hikes at its next meetings.. Other than this, technical buying above the 100 SMA barrier continues to support the move.

Therefore, it remains to be seen whether the latest move higher is supported by real buying or turns out to be stop hunting. Investors are now awaiting the post-meeting press conference, where comments from Thomas Jordan, Chairman of the SNB Governing Board, should give the USD/CHF pair a further boost. Later, during the first North American session, traders will take as a reference the weekly data of the initial applications for unemployment benefits in the United States.

USD/CHF technical levels