The same themes weighing on risk sentiment in recent weeks, namely the rising US dollar and elevated global bond yields, were at it again today. We saw the EUR/USD get closer to the 1.05 handle, USD/JPY neared 150.00 and gold broke $1885 to reach its lowest level since March. Stock markets were coming off their earlier highs. Today we are looking at the USD/CHF as this pair has now created a higher high, which is a clear bullish signal.
The Swissy has been among the big winners as the greenback extended its gains for 10 consecutive weeks. Judging by the dollar’s further gains this week, it looks like the Dollar Index will add one more weekly gain to make it 11 in-a-row. Today’s only piece of US data – durable goods orders – came in higher than expected. So, there was no reason for the dollar rally to end, apart from the fact it is getting a bit overstretched in the short-term outlook.
US dollar goes from strength to strength
The US dollar has been on a strong rally. It has been boosted by relatively stronger data in the US compared to other developed economic regions, such as the UK and Eurozone. Persistent signs of inflation, coupled with recent gains in crude oil prices, influenced by the OPEC extending its output cuts, have provided further impetus for Federal Reserve policymakers to maintain a more hawkish stance on interest rates. Consequently, the anticipation of the first interest rate cut has been pushed well into the latter half of 2024, with the Federal Open Market Committee (FOMC) now forecasting only two rate reductions, down from the previously projected four for the upcoming year. This shift in sentiment has led to the 10-year Treasury yield surpassing 4.50% for the first time since 2007.
The distinctly more hawkish stance of the US central bank, in contrast to its counterparts abroad, has been a driving force behind the robust performance of US bond yields and the US dollar. This resolute bullish trend in the dollar means the USD/CHF could rise further in the weeks ahead.
USD/CHF technical analysis
Having broken old high at 0.9147, which was the peak in June, the USD/CHF has created a higher high now. This confirms the bullish reversal we have seen over the past several weeks. Going forward, any short-term dips are likely to be supported. We think that the Swissy has paved the way for a run towards 0.9370 resistance area now. Key supports to watch now come in at 0.9147 and then at 0.9000. For as long as these levels hold, the path of least resistance would remain to the upside.
Written by Fawad Razaqzada, market analyst at FOREX.com
The Swissy has been among the big winners as the greenback extended its gains for 10 consecutive weeks. Judging by the dollar’s further gains this week, it looks like the Dollar Index will add one more weekly gain to make it 11 in-a-row. Today’s only piece of US data – durable goods orders – came in higher than expected. So, there was no reason for the dollar rally to end, apart from the fact it is getting a bit overstretched in the short-term outlook.
US dollar goes from strength to strength
The US dollar has been on a strong rally. It has been boosted by relatively stronger data in the US compared to other developed economic regions, such as the UK and Eurozone. Persistent signs of inflation, coupled with recent gains in crude oil prices, influenced by the OPEC extending its output cuts, have provided further impetus for Federal Reserve policymakers to maintain a more hawkish stance on interest rates. Consequently, the anticipation of the first interest rate cut has been pushed well into the latter half of 2024, with the Federal Open Market Committee (FOMC) now forecasting only two rate reductions, down from the previously projected four for the upcoming year. This shift in sentiment has led to the 10-year Treasury yield surpassing 4.50% for the first time since 2007.
The distinctly more hawkish stance of the US central bank, in contrast to its counterparts abroad, has been a driving force behind the robust performance of US bond yields and the US dollar. This resolute bullish trend in the dollar means the USD/CHF could rise further in the weeks ahead.
USD/CHF technical analysis
Having broken old high at 0.9147, which was the peak in June, the USD/CHF has created a higher high now. This confirms the bullish reversal we have seen over the past several weeks. Going forward, any short-term dips are likely to be supported. We think that the Swissy has paved the way for a run towards 0.9370 resistance area now. Key supports to watch now come in at 0.9147 and then at 0.9000. For as long as these levels hold, the path of least resistance would remain to the upside.
Written by Fawad Razaqzada, market analyst at FOREX.com