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  • Broad USD strength helps USD/CHF push higher for second straight day.
  • US Dollar Index erases pre-New Year losses, stays above 97.
  • Focus stays on US-Iran conflict ahead of ISM PMI data and FOMC minutes.

The USD/CHF pair registered modest daily gains on Thursday and closed above the 0.9700 mark. With the greenback preserving its strength on Friday, the pair edged higher and was last seen trading at 0.9728, adding 0.15% on a daily basis.

CHF struggles to capitalize on risk-aversion

After the US killed Iranian General Qasem Soleimani in a drone attack at the Baghdad International Airport, escalating tensions in the Middle East and heightened risks over a possible retaliation by Iran weighs on the market sentiment on Friday. Although the CHF usually finds demand as a safe-haven when markets turn risk-averse, investors seem to be focusing on gold and the JPY.

Additionally, the USD’s upbeat performance on Friday helps the pair stay afloat in the positive territory. The US Dollar Index, which rose 0.37% on Thursday, was last up 0.24% on the day at 97.04.

Earlier in the day, the data from Switzerland showed that the SVME Purchasing Managers’ Index (PMI) improved to 50.2 in December from 48.8 in November to beat the market expectation of 49.1 but failed to help the CHF gain traction.

In the second half of the day, markets will pay close attention to fresh developments in the Middle East as well as the Institute for Supply Management’s (ISM) PMI data from the US and the Federal Open Market Committee’s December meeting minutes.

Technical levels to watch for