USD/CHF hits fresh multi-month tops, reclaims 0.9300 mark amid stronger USD

• USD/CHF continued scaling higher on Friday and jumped to the highest level since July 2020.
• Sustained USD selling was seen as a key factor fueling the ongoing strong upward trajectory.
• A softer risk tone did little to benefit the safe-haven CHF or hinder the momentum ahead of NFP.

The USD/CHF pair shot to the highest level since July 2020 during the early European session, with bulls now looking to build on the momentum beyond the 0.9300 mark.

The pair prolonged its recent strong upward trajectory and continued scaling higher through the first half of the trading action on the last day of the week. The uptick was sponsored by the strong bullish sentiment surrounding the US dollar, which remained well supported by the prospects for a relatively stronger US economic recovery.

Investors remain optimistic about the US economic outlook amid the impressive pace of COVID-19 vaccinations and the progress on a massive US fiscal spending plan. The reflation trade continued pushing the US Treasury bond yields higher, which, in turn, was seen as another factor that provided an additional boost to the greenback.

The sell-off in the US fixed income market reignited after Fed Chair Jerome Powell on Thursday said that the recent surge in the US Treasury bond yields was not a disorderly move. Powell’s remarks disappointed investors anticipating immediate action to curb a sharp rise in long-term yields, which forced investors to unwind bearish USD bets.

Meanwhile, feats that the rout in the bond market could trigger distressed selling in other asset classes took its toll on the global risk sentiment. This was evident from a weaker tone around the equity markets. The risk-off mood, however, did little to benefit the safe-haven Swiss franc or stall the USD/CHF pair strong positive momentum.

Moving ahead, Friday’s key focus will on the closely watched US monthly jobs report, due later during the early North American session. A stronger reading will reinforce the narrative of a strong sequential recovery and lift the greenback, paving the way for a further appreciating move for the USD/CHF pair.

Technical levels to watch