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  • US Dollar Index recovers on Thursday from six-month lows.
  • USD/CHF has the best day in weeks, despite moving of highs. 

The USD/CHF pair rose for the first time since the beginning of the week and recovered ground after falling on Tuesday to the lowest since September 2018. It rose back above 0.9700 and peaked during the American session at 0.9732 before pulling back to 0.9715.

The main driver was a stronger US dollar against main European currencies, despite lower US yields. The US Dollar Index rose 0.45% on Thursday, boosting the USD/CHF. Volume across financial markets continues to be below normal levels. 

Analysts at BBVA explained that financial markets began the year on a positive note, with both equity markets and yield increased as a result of a fresh monetary stimulus announced by China and comments from US officials suggesting that the US and China could sign phase one of the agreement on January 15.

“Economic data was slightly weaker than expected, but was not the main reason behind the decline in yields. Meanwhile, geopolitical risk (US-Iran conflict) and ongoing 2020 uncertainty factors (US elections, Trump’s impeachment and US-China trade talks) might have played some role in today’s cautious tone,” BBVA analysts added. 

The Swiss franc did not benefit from rising geopolitical risks on Thursday. The key event on Friday will be the release of the minutes from the latest meeting of the Federal Reserve. 

Some levels 

From a technical perspective, the USD/CHF is biased to the downside, but the rebound on Thursday, if it holds above 0.9700, is a sign of exhaustion. A decline back under 0.9685 would expose the weekly low around the 0.9650 zone.