• USD/CHF rises to a new multi-month high, supported by a number of reasons.
  • Bets on more Fed rate hikes continue to drive up US bond yields and support the USD.
  • The SNB’s unexpected halt continues to weigh on the CHF and bodes well for additional gains.

On Monday, the USD/CHF pair receives some dip-buying near 0.9045 and reaches its highest level since June 13 during the Asian session. Spot prices are currently trading at 0.9075-0.9080 and appear prepared to build on last week’s breakout momentum via a theoretically significant 200-day Simple Moving Average (SMA).

The likelihood of further Fed policy tightening helps the US Dollar (USD) to stand near a six-month high, which is considered as a crucial factor acting as a tailwind for the USD/CHF pair. In reality, the US Federal Reserve reinforced the longer-for-higher story last week, warning that still-sticky inflation would likely necessitate at least one more interest rate hike before the end of the year.

Furthermore, the so-called ‘dot-lot’ showed only two rate decreases in 2024, as opposed to four previously projected. This resulted in a prolonged selloff in the US fixed-income market, with the yield on the rate-sensitive two-year government bond reaching its highest level since 2007. Furthermore, the benchmark 10-year US Treasury yield is approaching a 16-year high, lending strength to the dollar and USD/CHF pair.

See also  Analyzing the Decline of Bitcoin, Ethereum, and Other Cryptos Two Years Post-2021 Peak
USD/CHF Price Chart – Source: Tradingview
USD/CHF Price Chart – Source: Tradingview

The Swiss Franc (CHF), on the other hand, is under pressure after the Swiss National Bank (SNB) broke its five-week sequence of increases last week. At the end of the quarterly monetary policy meeting, the SNB chose to hold its benchmark interest rate steady, defying expectations for a 25 basis point increase in the light of sub-2% inflation readings and recent dismal economic indicators.

This, together with acceptance above the critical 200-day SMA, bodes well for an extension of the USD/CHF pair’s well-established uptrend over the last two months or so. In the absence of any market-moving economic data from the United States on Monday, US bond yields will play a significant role in affecting USD price dynamics and providing some impetus to the USD/CHF pair.

Related News:


Leave a Reply