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  • US dollar consolidates gains versus its European rivals.
  • Upside in USD/CHF remains capped by 0.9950.

The USD/CHF is up on Tuesday on the back of a stronger US dollar against European currencies and the yen. The pair rose from 0.9915 to 0.9952 reaching the highest level since Friday. Then pulled back and as of writing, trades at 0.9935/40.  

The DXY is up 0.10% trading above 96.70, on its way to the highest close since March 14. The Swiss franc is up against the euro but is losing ground modestly versus the pound. Fears about the slowdown in Europe and the Brexit drama appear to be USD supportive. Als  

Data released today in the US came in mostly below expectations. Housing starts tumbled 8.7% in February, erasing much of the 11.7% gain of the previous month. “All of the swing was in single-family starts, which are more susceptible to swings in the weather“, said Wells Fargo analysts. Consumer confidence data showed an unexpected decline in February to 124.1 from 131.4.  

USD/CHF Outlook  

The pair in  the short-term continue to move sideways around 0.9930/40, consolidating the slide of the last two weeks. The recent rebound could point that a bottom is in place at around 0.9900. A firm break under 0.9900 would clear the way to more losses in the short-term. On the upside, above 0.9950 the greenback is likely to gain momentum.  

On a wider, perspective, CIBC Capital Markets analysts see the CHF range-bound over the next month, as risk trades sideways. “Thus far, the market hasn’t broken above the 1.01 resistance level. Therefore, we maintain that upward moves in USDCHF are limited, as the bulk of the risk rally is likely behind us. However, we look for upside potential in the carry trade over the next couple of months, especially with the ECB on the sidelines for the rest of the year. This will be further supported by US-China trade talks, if Trump follows through on his plans to meet Xi over the coming weeks. Longer-term, we like USDCHF lower as global growth slows, and as central banks continue to withdraw accommodation“.