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  • USD/CHF gained traction for the third straight day amid sustained USD buying interest.
  • A softer risk tone did little to benefit the safe-haven CHF or hinder the strong momentum.

The USD/CHF pair continued scaling higher through the early European session and shot to the highest level since November 2020, around the 0.9175-80 region in the last hour.

The pair built on its recent bullish momentum and gained some follow-through traction for the third consecutive session on Tuesday. The uptick marked the fifth day of a positive move in the previous six and was exclusively sponsored by a broad-based US dollar strength.

The impressive pace of COVID-19 vaccinations and the progress on a massive US fiscal spending plan has been fueling hopes for a relatively faster US economic recovery from the pandemic. This, in turn, was seen as a key factor that continued underpinning the greenback.

Meanwhile, the reflation trade forced investors to start pricing in a possible uptick in inflation and raised doubts that the Fed would retain ultra-low rates for a longer period. This further benefitted the buck and provided an additional boost to the USD/CHF pair.

Tuesday’s strong positive move could further be attributed to some technical buying on a sustained move beyond the very important 200-day SMA. Even a softer risk tone, which tends to drive flows towards the safe-haven Swiss franc, did little to hinder the momentum.

Hence, some follow-through strength towards reclaiming the 0.9200 round-figure mark, nearing November 2020 swing lows, now looks a distinct possibility. That said, slightly overbought RSI on the daily chart warrants some consolidation before the next leg up.

There isn’t any major market-moving economic data due for release from the US on Tuesday. Hence, the USD price dynamics will continue to play a key role in influencing the USD/CHF pair. Traders might further take cues from the broader market risk sentiment.

Technical levels to watch

 

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