USD/CHF steadies above 0.9600, adds more than 1.5%

• Broad USD strength provides a boost to USD/CHF on Tuesday.
• Wall Street’s main indexes rebound following Monday’s fall.
• Fed relaunches Commercial Paper Funding Facility (CPFF) to inject liquidity.

The USD/CHF pair rose sharply on Tuesday and touched its highest level since early March at 0.9649 before going into a consolidation phase. As of writing, the pair was trading at 0.9625, adding 1.65% on a daily basis.

USD strength dominates FX markets

Heightened concerns over a shortage of USD funding triggered a fresh wave of USD-buying on Tuesday and lifted the US Dollar Index (DXY) to its highest level in more than three weeks at 99.83. 

With the Federal Reserve announcing new measures to reassure its commitment to provide the markets with the liquidity it needs, the DXY pulled away from its highs to limit the pair’s gains. 

The Fed said that it will reinstate the Commercial Paper Funding Facility (CPFF) and the NY Fed announced that it will be offering an additional overnight repurchase agreement (repo) operation of $500 billion. As of writing, the DXY was up 1.42% on the day at 99.38.

In the meantime, major equity indexes in the US gained traction to reflect upbeat market sentiment and made it difficult for the CHF to find demand as a safe-haven. Earlier in the day, the data published from the US showed that Retail Sales in February declined by 0.5% on a monthly basis and Industrial Production expanded by 0.6%.

Technical levels to watch for