- USD/CHF is seeking a break above 0.9280 under a risk aversion theme.
- Rising odds of more rate hikes from the Fed announcing at its March monetary policy meeting are driving US Treasury yields.
- The Swiss Franc asset successfully tested the break of the descending trendline located from 0.9600.
USD/CHF pair gathering strength to break above 0.9280 at the start of the Asian session. The Swiss franc asset looks to make bigger gains despite the risk aversion theme supported by market participants.
Positive preliminary US S&P PMI data (February) confirmed that economic activity is once again expansionary, which may be the result of a recovery in consumer spending. This has led to an outright decline in risk-weighted assets as expansionary economic activity supports the hawkish view of the Federal Reserve (Fed).
S&P500 futures are offering modest gains at the start of the Tokyo session, but overall sentiment is still risk-free. The US dollar index (DXY) is looking to extend gains above 103.90, however upside looks favorable as volatility in the FX domain may remain high ahead of the Federal Open Market Committee (FOMC) minutes. Increasing chances of more rates notification from Fed support US Treasury yields at their March monetary policy meeting. Payback 10 years bonds jumped to almost 4%.
As for the Swiss franc, comments from Swiss National Bank (SNB) vice-chairman Martin Schlegel failed to add strength to the Swiss franc. SNB Schlegel said the central bank is “still willing” to be active in foreign exchange markets in pursuing its goal of price stability.
USD/CHF Technical Outlook
USD/CHF successfully tested the breakout of the descending trend line placed on November 21 at the high around 0.9600 on the 4-hour scale. A successful test of a trendline breakout in the absence of solid downward pressure usually indicates bullish strength and sets the stage for a confident move forward.
The Swiss franc asset confidently moved its auction above the 200-period exponential moving average (EMA) at 0.9245.
Meanwhile, the Relative Strength Index (RSI) (14) is trying to enter the bullish zone of 60.00-80.00.