- USD/CHF gains traction for the eighth day in a row and rises to a new multi-week high.
- Fed expectations continue to support the USD and provide a good boost to the pair.
- Risk-off sentiment supports the safe-haven CHF and caps the pair’s gains.
The pair USD/CHF extends its almost two-week uptrend from levels below 0.9500 and rises for the eighth day in a row on Monday. The pair hits a three-and-a-half-week high during the early European session, and the bulls now expect strength to hold beyond the 0.9800 level.
The US dollar attracted fresh buying on the first day of the week and approached two-decade highs hit on Friday amid Fed expectations. Indeed, markets seem convinced that the US central bank will maintain its aggressive policy of tightening to combat persistent inflation. Expectations were bolstered by FOMC minutes released last Wednesday, which indicate that another rate hike of 50 or 75 basis points is likely at the July meeting.
The optimistic monthly NFP employment report in the US., which showed the economy added 372,000 jobs in June, reinforced the acceleration in Fed rate hikes and continued to support the dollar. This, in turn, was seen as a key factor that acted as a tailwind for the USD/CHF pair. Having said that, prevailing risk-off sentiment offered some support to the safe-haven Swiss francwhich prevented the bulls from opening aggressive positions around the USD/CHF pair and limited the pair’s rise, at least for now.
Investors are followed worrying that rapidly rising interest rates and tightening financial conditions will pose a challenge to growth world economic. In addition, the current war between Russia and Ukraine and the latest outbreak of COVID-19 in China have fueled fears of a recession. Therefore, it is prudent to wait for strength beyond the 0.9800 level to hold before investors start to position themselves for an extension of the recent USD/CHF bull run.
The market’s attention is now focused on the publication of the latest figures on consumer CPI inflation in the US, which will be published on Wednesday. Also released on this week’s US economic calendar will be monthly retail sales data and preliminary consumer sentiment from Michigan on Friday. These data will influence the short-term price dynamics of the dollar and will give a new impetus to the USD/CHF pair. Meanwhile, investors could follow the market’s risk sentiment to take advantage of some short-term opportunities.
USD/CHF technical levels
Source: Fx Street
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