USD/CHF rests near 0.9150 after biggest daily gain since March

• USD/CHF consolidates on Wednesday’s 1.2% rise – the biggest daily gain in five months. 
• Fed minutes dashed hopes for additional measures like yield curve control. 

USD/CHF is trading near 0.9155 at press time, having gained over 1.2% on Wednesday – the biggest single-day gain since March 19. 

The oversold greenback picked up a bid on Wednesday after the minutes from the Federal Reserve’s July 28-29 meeting expressed skepticism over using additional unconventional measures like yield curve control. Speculation was doing the rounds in the run-up to the Fed minutes that the central bank would adopt yield targeting measures. Further, theFed minutes did not signal greater tolerance for above-target inflation. 

However, while the Fed officials are not in favor of implementing yield curve control, they have little room to taper bond purchases. That’s because the US budget deficit is expected to rise above 20% of the gross domestic product this year. Some observers believe the central bank may have to increase bond purchases if debt sustainability becomes an issue. In other words, the greenback may have a tough time charting a big bounce. 

That said, from a technical analysis perspective, the pair looks to have bottomed out for now and could challenge the 50-day simple moving average resistance at 0.9315. The daily chart now shows a bullish divergence of the relative strength index. 

Technical levels