USD/CHF bounces off 2-1/2 year lows, above mid-0.9200s

Analysis General

Published: 2/15/2018 5:40:00 AM

   •  US bond yields help abate USD selling and prompt some short-covering.

   •  Risk-on mood further weighing on CHF’s safe-haven demand.

The USD/CHF pair trimmed some of its early losses and has managed to recover around 30-35 pips from over 2-1/2 year lows touched earlier today.

In absence of any fresh development, a modest pickup in the US Treasury bond yields, backed by firming expectations for additional Fed rate hike moves in 2018, helped ease bearish pressure surrounding the US Dollar and seems to have prompted some short-covering move. 

Adding to this, strong gains across European equity markets, pointing to improving investors' appetite for riskier assets, was seen weighing on the Swiss Franc's safe-haven appeal and further collaborated to the pair's uptick from its lowest level since June 2015.

It, however, remains to be seen if the up-move is backed by any genuine buying or turns out to be a dead-cat bounce. Hence, it would be prudent to wait for a strong follow-through buying interest before confirming that the pair might have bottomed out in the near-term.

Technical levels to watch

Immediate resistance is now pegged near the 0.9300 handle, above which the pair is likely to accelerate the recovery move towards 0.9345-50 supply zone. On the flip side, weakness back below mid-0.9200s, leading to a subsequent break below 0.9230 level, should pave the way for an extension of the pair's near-term bearish trajectory towards the 0.9200 handle.

Tag: General
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