USD/CHF struggles to find acceptance above 0.9200, downside seems limited
- USD/CHF struggled to capitalize on this week’s positive move beyond the 0.9200 mark.
- A softer risk tone benefitted the safe-haven CHF and capped the upside for the major.
- The recent upsurge in the US bond yields underpinned the USD and extended support.
The USD/CHF pair climbed to near three-week tops in the last hour, albeit struggled to find acceptance above the 0.9200 mark and quickly retreated few pips thereafter.
Investors turned cautious amid worries about the fast-spreading Delta-variant of the coronavirus. This was evident from a softer risk tone, which underpinned demand for the safe-haven Swiss franc. This, in turn, failed to assist the USD/CHF pair to capitalize on this week's goodish rebound from the 0.9120-15 support zone.
The downside, however, remains cushioned amid a modest US dollar strength, buoyed by the recent surge in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot to the highest level since mid-July, around 1.385% on Tuesday amid expectations for an imminent Fed taper announcement.
The chances of the Fed announcing tapering at the September meeting faded following the release of the August NFP report, which showed that the US economy added the fewest jobs in seven months. That said, investors still seem convinced that the US central bank could begin rolling back its pandemic-era stimulus in November.
The fundamental backdrop supports prospects for additional gains, though bulls are likely to wait for a sustained strength beyond the 0.9200 mark before placing fresh bets. The USD/CHF pair might then accelerate the momentum further towards the 0.9230-35 supply zone amid absent relevant market moving economic releases.
Technical levels to watch