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USD / CHF rises to week-long highs, seeks to extend momentum above 0.9000

  • USD / CHF gained traction for the second day in a row and rose to new weekly highs.
  • Risk appetite undermined the safe haven CHF and provided a modest boost to the pair.
  • The rally in US bond yields provided some support for the USD.

The pair USD/CHF it updated weekly highs during the early days of the American session, and the bulls are now looking to take advantage of the momentum above the 0.9000 psychological level.

Following an intraday drop to the 0.8960 region, the pair caught some new offers and turned positive for the second straight session on Thursday. A strong rally in US equity futures undermined the safe haven Swiss franc, which, in turn, was seen as a key driver providing a modest rise to the USD / CHF pair.

Global risk sentiment remained well supported by expectations that the Fed will maintain its ultra-lax policy stance for a longer period. Speculation was further fueled by US durable goods order numbers, which declined 1.3% in April versus a modest 0.7% increase anticipated.

Separately, the second reading of US GDP coincided with initial estimates and showed that the economy expanded at an annualized rate of 6.4% during the January-March period. This, however, was slightly below the 6.5% forecast, although it was largely offset by data showing fewer weekly jobless claims than expected.

The Labor Department reported that the number of Americans who filed new applications for unemployment benefits fell to 406,000 during the week ending May 21, well below the 425,000 expected and 478,000 the previous week. However, the data failed to convince investors that the Fed should begin discussing plans to reduce the pace of bond purchases.

Meanwhile, risk appetite flows triggered a sharp rise in US Treasury yields, helping put a tentative bottom below the dollar and extending some additional support to the USD / CHF pair. That said, it remains to be seen if the rally is backed by some genuine buying or if it is led solely by some short hedging move.

Technical levels

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