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  • USD/CHF struggles to extend Fed-led rally, recovers from intraday low of late.
  • Markets remain dicey post-Fed, news over US-China tussles, US infrastructure spending fail to get noticed.
  • SNB is likely to portray another status-quo, bi-annual press conference becomes important to follow for fresh impulse.

USD/CHF edges higher around 0.9085 amid a subdued trading session during early Thursday that followed the US Federal Reserve-led (Fed) market action and precedes the Swiss National Bank’s (SNB) monetary policy meeting. In doing so, the quote remains around one month high but lacks clear directions ahead of the key event.

The pair jumped the most since November 2020 the previous day after the Fed’s bullish halt. The US central bank matched wide marker forecasts of announcing no rate change, neither any adjustment to the bond purchases, but the upward revisit to economic forecasts and rate expectations triggered the rush to risk-safety amid fears of tapering and rate hike in near future.

As per the latest Federal Open Market Committee (FOMC) forecasts, US GDP can grow 7.0% in 2021 versus 6.5% previous whereas the PCE figure, the Fed’s preferred inflation gauge, is seen at 3.4% for 2021 and 2.1% for the next year. It’s worth noting that the FOMC members’ rate-hike expectations, mostly known as dot-plot, signaled seven officials expecting lift-off in 2022 and 13 in 2023.

On a qualitative side, Fed Chairman Jerome Powell accepted that the inflation run-up could be more consistent than earlier expected and weighed on the market sentiment, indirectly favoring the US Treasury yields and US dollar index (DXY).

Following that, chatters over the progress in US President Joe Biden’s infrastructure spending plan and Sino-American tussles, not to forget fears of Delta variant of covid, restrict the USD/CHF upside amid a quiet session marking the pre-SNB trading lull.

Against this backdrop, the US 10-year Treasury yields trim the heaviest jump since March, marked the previous day around 1.57% whereas the US dollar index (DXY) eases from two-month, not to forget mentioning after the biggest rally in over a year, to 91.37 by the press time.

Looking forward, USD/CHF traders will keep their eyes on the SNB announcements for fresh directions. Even if the Swiss central bank isn’t expected to alter the current monetary policy, the pair traders will be keenly waiting for the bi-annual press conference for any tapering related clues, which if announced can reverse the Fed-led gains.

Technical analysis

USD/CHF keeps the previous day’s upside break of the monthly resistance line, now support, as well as 200-day, amid bullish MACD, which in turn favors the pair buyers. However, a daily closing beyond the 0.9100 hurdle becomes necessary for the bulls before targeting the previous month’s top near 0.9165. Meanwhile, the stated SMA and support line, respectively around 0.9068 and 0.9030, could probe the pullback moves.