USD/CHF up 0.71% on the day; dollar bulls back in the game above 1.0044

Currently, USD/CHF is trading at 1.0097, up +0.71% or 71-pips on the day, having posted a daily high at 1.0105 and low at 1.0023.

The American dollar vs. Swiss franc had reverted last month's speculation of a possible deeper or trend correction as the pair has accumulated 80-pips in the last 15 trading days. Furthermore, the US dollar index clocked higher near 101.60 signaling traders the opportunity to add more risk in the short-term.

Why markets should expect a weaker franc?

Boris Dzhingarov at Emerging Europe noted, "Switzerland has one of the highest standards of living in the world and is home to many exporting companies. When the Franc is expensive, it hurts Switzerland because exports are worth 70 per cent of its GDP. Before removing the valuation cap, the Swiss National Bank had increased the supply of Francs to meet the Euro-Franc ratio. Removing the cap ended the need to print more Francs and reduced the money printing that some feared would lead to hyperinflation in Switzerland."

Bond market still not on board with a March rate hike

Historical data available for traders and investors indicates during the last 8-weeks that USD/CHF pair had the best trading day at +0.80% (Jan.6) or 81-pips, and the worst at -1.05% (Jan.5) or (105)-pips. As of writing, the US 10yr treasury yields had a trading range 2.43% to 2.45%, up +0.74% on the day or +0.0179.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.0095 (50-DMA), then at 1.0219 (high Jan.5) and above that at 1.0320 (high Dec.28). While supports are aligned at 1.018 (100-DMA), later at 0.9886 (200-DMA) and finally below that at 0.9734 (low Nov.8).

On the long-term view, upside barriers are aligned at 1.0101 (short-term 50.0% Fib) and above that level at 1.0158 (short-term 61.8% Fib). While supports are aligned at 1.0044 (short-term 38.2% Fib), later at 1.0028 (long-term 61.8% Fib) and below that at 0.9974 (short-term 23.6% Fib).

EUR/USD: bearish momentum to accelerate below 1.0520