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  • USD/CHF staged a goodish recovery move from multi-year lows on Thursday.
  • The risk-on mood undermined the safe-haven CHF and remained supportive.
  • Rallying US bond yields benefitted the USD and provided an additional boost.

The USD/CHF pair built on its steady intraday recovery move and climbed to three-day tops, around the 0.8835 region during the first half of the European session.

A combination of factors assisted the pair to gain some strong positive traction on Thursday and move away from multi-year lows, around the 0.8760-55 region touched in the previous session. The prevalent risk-on environment undermined demand for perceived safe-haven assets, including the Swiss franc. This, along with a goodish US dollar bounce provided an additional boost to the USD/CHF pair.

The global risk sentiment remained well supported by hopes for a strong global economic recovery in 2021 and seemed unaffected by the unprecedented chaos in Washington – the US capital city. Supporters of the outgoing President Donald Trump stormed the Capitol Hill in an attempt to overturn his election defeat. That said, the order was restored quickly and the incident did little to influence the market.

Investors’ appetite for riskier assets increased further after a Democratic victory in the crucial US Senate runoff elections in the state of Georgia raised prospects for more US fiscal stimulus. Expectations of larger government borrowing pushed the benchmark 10-year US Treasury yield further beyond the 1.0% mark, to the highest level since March and extended some support to the greenback.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 0.8815 region further contributed to the USD/CHF pair’s intraday positive move. A subsequent move beyond the weekly tops, around the 0.8845 region, might trigger some additional short-covering move and pave the way for a further near-term appreciating move for the major.

Market participants now look forward to the US economic docket – highlighting the releases of the usual Initial Weekly Jobless Claims and ISM Services PMI. The data, along with the US bond yields, might influence the USD price dynamics. Apart from this, the broader market risk sentiment might further contribute to produce some short-term trading opportunities around the USD/CHF pair.

Technical levels to watch