USD/CHF Firmly to the Upside amid Broad US Dollar Strength

2 min read
09 Mar, 21
Written by Clover4X
Article Highlights:
  • USD/CHF reaches higher to a 7-month top
  • Broad US dollar strength moves the currency market

USD/CHF Firmly to the Upside

The USD/CHF pair has been trading to the upside for the past couple of months. In fact, buyers seem insatiable to own the US dollar and offer the Swiss franc. Since hitting a multi-year bottom on January 6, the greenback has been on a tear against the Swiss currency. The rally resulted in a 7% appreciation so far this year. It has been one of the strongest performances for a currency pair year-to-date.

The bottom for the pair, 0.8757, turned out to be the inflection point that boosted buyers’ confidence. This propelled the pair to the current market price of 0.9350. The pair is now trading at a 7-month high as the previous time the exchange rate hovered above 0.9300 was in late July 2020.

In the short-term, the USD/CHF is in its fifth consecutive day of gains as the dollar keeps advancing against peers across the currency market. The USD/JPY pair is also trading at higher levels, up over 6% from its lows in early January. USD/JPY is approaching an 8-month top at 109.20, currently trading at 108.60.

Anticipation for Inflation Report

The EUR/USD is also affected by the broad US dollar strength as the pair slid to a new low earlier today. Therefore marking a 4.20% decline from its highs reached in early January. During the Asian trading session on Tuesday, the EUR/USD pair dipped to a 3-month low of 1.1835. However, bulls have been the more active side and the rate is now lifted to levels around 1.1900.

As the US Congress is on the verge of approving President Joe Biden’s massive fiscal injection into the economy, the much-anticipated stimulus bill does not seem to invoke fears of inflation or rising interest rates as the US dollar continues to appreciate. It appears that the urgent situation requiring the issuance of more debt acts as a catalyst for the appreciation of both yields and the US dollar.

Tomorrow, market participants will monitor if the inflation rate has been moving to the upside for February. The report on rising prices, Core CPI, will be released at 08:30 am EST on Wednesday.

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