- The dollar falls and bonds rise sharply.
- The Bank of England buys bonds and causes a global rebound in stocks and commodities.
- USD/CHF accelerates correction from three-month highs.
The USD/CHF fell sharply from the highest level in three months, near the parity zone and bottomed at 0.9743, a one-week low. The pair remains below 0.9800 with a negative tone, while the US dollar falls across the board.
The dollar weakened amid a rally in Treasury bonds and equity markets. The announcement of the purchase of gilts by the Bank of England caused sharp movements and triggered the recovery of bonds. The Bank of England said it had bought 1.025 billion pounds of gilts on Wednesday. US yields fell sharply from multi-year highs. The US 10-year yield fell from over 4.00% to 3.76%.
The Swiss franc also rose against the euro and the British pound helped by movements in the bond market.
Double top at 0.9960 and crash
USD/CHF rallied earlier to test Monday’s high of 0.9965 and failed to break it, before pulling back sharply to break below 0.9860, confirming a double top formation. The target of the formation is around 0.9730, close to Wednesday’s low of 0.9744. A few points lower, expect the 20-day Moving Average at 0.9725.
A daily close below the 20-day SMA could change the short-term bearish bias to neutral or bearish. The dollar needs to recover levels above 0.9880 to strengthen again.
Technical levels
Source: Fx Street
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