USD/CHF accelerates its rally to test multi-month high at 0.9330
- The US dollar keeps rallying amid higher US bond yields.
- The positive risk sentiment is adding pressure on the CHF.
- Above 0.9330, the pair might set sail towards YTD high at 0.9470.
The US dollar has accelerated its uptrend during Wednesday’s US trading session, breaking through the 0.9300 psychological level to test 5, ½-month highs at 0.9330. Higher US Treasury yields, combined with a brighter risk sentiment are pushing the Swiss franc lower against the USD.
The US dollar continues marching higher
The US Dollar Index, which measures the greenback’s strength against its main rivals, has broken beyond the 94.00 mark earlier today, reaching levels not seen since November last year. The steady rise in US bond yields, triggered by expectations that the Federal Reserve will start tapering its bond-buying program, is boosting demand for the USD.
Beyond that, investors' sentiment has improved substantially on Wednesday, with the main European and US stock markets posting solid advances, after Tuesday’s sell-off, easing concerns about the surging gas prices in Europe and the debt crisis at the Chinese Evergrande Group. This scenario has undermined support for the safe-haven CHF.
On the macroeconomic front, the US pending home sales has shown a solid rebound in August with an 8.1% increase on the month and with the four major regions reporting an improvement from the previous month, which has increased confidence in the USD.
USD/CHF: breach of 0.9330 might expose YTD high at 0.9470\
The pair is now testing September’s high at 0.9330. Above here, the 0.9350 area (78.6% Fib. Retracement of the April-June decline) might offer some resistance before facing April’s high at 0.9470.
On the downside, 0.9300 previous resistance might offer support on a potential pullback. If the pair retreats lower, then 0.9260 (Fib retracement) and September 22 low at 0.9215 might come into play.
Technical levels to watch