USD/CHF climbs above 1.02, closes in on multi-year highs

• US Dollar Index clings to gains above mid-97s on Tuesday.
• Economic optimism in the U.S. improves sharply.
• Wall Street suffers heavy losses for the second straight day.

After spending a large part of the day moving sideways in a tight range near 1.0170, the USD/CHF pair gained traction and broke above the 1.02 mark to touch a fresh 12-day high of 1.0226. As of writing, the pair was trading at 1.0215, adding 0.36% on a daily basis and staying dangerously close to the 28-month high that it set 1.0237 in late April.  

The broad-based USD strength seems to be the primary driver behind the pair’s daily rally today. Boosted by the risk-off flows, the US Dollar Index, which tracks the buck against a basket of six major rival currencies, rose to a daily high of 97.72 and was last seen up 0.11% on the day at 97.66. Although the Chinese delegation is said to travel to Washington despite the U.S. President Donald Trump’s threat to increase the tariff rate to 25%, it’s still unclear if sides are going to be able to make any kind of progress. At the moment, the Dow Jones Industrial Average is losing 1.7% and the Nasdaq Composite is erasing nearly 2% to reflect the sour market sentiment.

Meanwhile, the Investors Business Daily’s Economic Optimism Index rose to 58.6 in May from 54.2 in April and fell short of the market expectation of 54.5 to help the greenback preserve its strength.  

There won’t be any macroeconomic data releases in the remainder of the day and the dollar’s market valuation is likely to remain the sole driver of the pair’s movements.  

Technical levels to consider