- USD / CHF consolidates the strong movement of the previous day to two-week highs.
- The positive tone of risk undermined the CHF – safe haven and continued to provide support.
- Falling US bond yields have kept the dollar on the defensive and limited the pair’s rise.
- Investors also seem reluctant to place bets, preferring to wait for the release of the US NFP report.
The pair USD/CHF it lacks a firm directional bias and oscillates between tepid gains and minor losses, above 0.9200 during the first half of the European session.
A combination of divergent forces did not help the USD / CHF pair to capitalize on strong overnight gains to a two-week high and led to a moderate / in-range price movement on Friday. A softer tone around US Treasury yields kept the dollar bulls on the defensive and limited the rise. That said, an overall positive risk tone undermined the safe-haven Swiss franc and lent some support.
Overall, the aggressive outlook from the Fed is acting as a tailwind for the dollar and has helped limit any significant declines for the USD / CHF pair. It’s worth remembering that the FOMC’s Dec. 14-15 Monetary Policy Meeting Minutes released on Wednesday indicated that the US central bank could raise interest rates earlier than anticipated. Furthermore, the money market is now priced at about an 80% probability of an eventual takeoff in March 2022.
Fundamental context supports prospects for an extension of this week’s positive rebound from 0.9100, a two-month low. The bulls, however, remain cautious in anticipation of Friday’s release of monthly US employment data and market reaction. The popularly known NFP report, to be released later today during the early days of the American session, will play a key role in determining the next leg of a directional move for the USD / CHF pair.
Technical levels
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