USD/CHF consolidates Tuesday’s post-US CPI rally, seems poised to appreciate further


  • USD/CHF holds steady above the 0.9600 mark and looks to build on the overnight strong move up.
  • Bets for more aggressive rate hikes by the Fed favour the USD bulls and reaffirms the positive bias.
  • Signs of stability in the equity markets undermine the safe-haven CHF and offer additional support.

The USD/CHF pair consolidates the overnight strong rally of over 150 pips from a nearly one-month low and oscillates in a range, above the 0.9600 mark through the early European session on Wednesday.

The US dollar edges lower and erodes a part of Tuesday's stronger US consumer inflation data-inspired rally amid a modest downtick in the US Treasury bond yields. This, in turn, is seen as a key factor acting as a headwind for the USD/CHF pair. That said, firming expectations that the Federal Reserve will keep raising interest rates at a faster pace to tame inflation should help limit any meaningful downfall for the US bond yields and the greenback.

In fact, the markets have started pricing in the possibility of a full 1% rate hike in the September FOMC meeting and another supersized 75 bps increase in November. The bets were reaffirmed by the US CPI report and lifted the yield on rate-sensitive two-year US government bonds to an almost 15-year high. Apart from this, signs of stability in the financial markets could undermine the safe-haven Swiss franc and offer some support to the USD/CHF pair.

The fundamental backdrop seems tilted in favour of bullish traders and suggests that the recent sharp pullback from the 0.9870 area or a nearly two-month high has run its course. Hence, any meaningful dip could now be seen as a buying opportunity and remain limited. The USD/CHF pair seems poised to climb further towards reclaiming the 0.9700 round-figure mark although the 50-day SMA at 0.9640 is a key obstacle for it to overcome before questing higher. Traders now look forward to the US Producer Price Index (PPI) for a fresh impetus.

Technical levels to watch

USD/CHF

Overview
Today last price 0.9612
Today Daily Change -0.0004
Today Daily Change % -0.04
Today daily open 0.9616
 
Trends
Daily SMA20 0.968
Daily SMA50 0.9648
Daily SMA100 0.9693
Daily SMA200 0.9478
 
Levels
Previous Daily High 0.9634
Previous Daily Low 0.948
Previous Weekly High 0.987
Previous Weekly Low 0.9547
Previous Monthly High 0.9808
Previous Monthly Low 0.9371
Daily Fibonacci 38.2% 0.9575
Daily Fibonacci 61.8% 0.9538
Daily Pivot Point S1 0.9519
Daily Pivot Point S2 0.9422
Daily Pivot Point S3 0.9365
Daily Pivot Point R1 0.9673
Daily Pivot Point R2 0.973
Daily Pivot Point R3 0.9827

 

 

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