USD/CHF climbs to one-week tops, looks to extend the momentum beyond 0.9000 mark

  • USD/CHF gained traction for the second straight day and climbed to fresh weekly tops.
  • The risk-on rally undermined the safe-haven CHF and provided a modest lift to the pair.
  • Rallying US bond yields extended some support to the USD and remained supportive.

The USD/CHF pair refreshed weekly tops during the early North American session, with bulls now looking to build on the momentum further beyond the key 0.9000 psychological mark.

Following an intraday dip to the 0.8960 region, the pair caught some fresh bids and turned positive for the second consecutive session on Thursday. A strong rally in the US equity futures undermined the safe-haven Swiss franc, which, in turn, was seen as a key factor that provided a modest lift to the USD/CHF pair.

The global risk sentiment remained well supported by expectations that the Fed will retain its ultra-lose policy stance for a longer period. The speculations were further fueled by Thursday’s release of a rather unimpressive US Durable Goods Orders, which declined by 1.3% in April as against a modest 0.7% rise anticipated.

Separately, the second reading of the US GDP print matched initial estimates and showed that the economy expanded by 6.4% annualized pace during the January-March period. This, however, was slightly below the 6.5% anticipated, though was largely offset by data showing fewer than expected weekly jobless claims.

The Labor Department reported that the number of Americans filing new claims for jobless benefits fell to 406K during the week ended May 21, well below 425K expected and the previous week’s 478K. The data, however, failed to convince investors that the Fed will need to start discussing plans to reduce the pace of bond purchases.

Meanwhile, the risk-on flow triggered a sharp spike in the US Treasury bond yields, which helped to put a tentative floor under the greenback and extended some additional support to the USD/CHF pair. That said, it remains to be seen if the uptick is backed by any genuine buying or is solely led by some short-covering move.

Technical levels to watch

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