- USD/CHF gained traction for the second consecutive session on Wednesday.
- Bulls seemed rather unaffected by a softer tone surrounding the greenback.
- Receding safe-haven demand weighed on the CHF and remained supportive.
The USD/CHF pair jumped to the highest level since early December, around the 0.9085 region in the last hour, albeit quickly retreated few pips thereafter.
The pair built on the previous day's strong positive momentum and gained some follow-through traction for the second consecutive session on Wednesday. The uptick lacked any obvious fundamental catalyst and could be attributed to some cross-driven strength stemming from a strong rally in the EUR/CHF cross.
This comes on the back of the overnight sustained strength above the 100-day SMA and seemed to have prompted some technical buying. Apart from this, a turnaround in the global risk sentiment – as depicted by a goodish bounce in the equity markets – undermined the safe-haven Swiss franc and remained supportive.
That said, a weaker tone surrounding the US dollar held bulls from placing aggressive bets and kept a lid on any further gains for the USD/CHF pair. The USD was pressured by a modest pullback in the US Treasury bond yields, which started losing steam after Fed Chair Jerome Powell's dovish comments on Tuesday.
During the first day of his semi-annual testimony before the Congress, Powell reiterated that interest rates will remain low and the Fed will keep buying bonds to support the US economic recovery. This makes it prudent to wait for some follow-through buying before traders start positioning for any further appreciating move.
Wednesday's US economic docket highlights the only release of New Home Sales data. Hence, the key focus will remain on Powell's second day of the semi-annual testimony before Congress. This might influence the USD price dynamics and produce some short-term trading opportunities around the USD/CHF pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays weak near 1.0650 ahead of Eurozone PMI data
EUR/USD remains on the back foot near 1.0650 in European trading on Tuesday. Resurgent US Dollar demand amid a cautious risk tone weighs on the pair. Investors stay wary ahead of the preliminary Eurozone and US business PMI data.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold could see a rebound before resuming the correction
Gold price sees a fresh leg down in Asia on Tuesday even as risk flows dissipate. Receding fears over Middle East escalation offset subdued US Dollar and Treasury bond yields. Gold remains heavily oversold on the 4H chart, rebound appears in the offing.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.