USD/CHF attempts a break above 0.9280 as risk-off mood solidifies ahead of FOMC minutes
- USD/CHF is aiming to deliver a break above 0.9280 amid the risk aversion theme.
- Rising odds of more rates announcement by the Fed in its March monetary policy meeting are fueling US Treasury yields.
- The Swiss Franc asset has successfully tested the breakout of the downward-sloping trendline placed from 0.9600.
The USD/CHF pair is gathering strength to deliver a break above 0.9280 in the early Asian session. The Swiss franc asset is struggling to deliver more gains despite the risk aversion theme underpinned by the market participants.
An upbeat preliminary United States S&P PMI (Feb) data cleared that the economic activities are getting expansionary again, which could be the result of a rebound in consumer spending. This led to a sheer fall in the risk-perceived assets as expansionary economic activities support a hawkish view from the Federal Reserve (Fed).
S&P500 futures are offering mild gains in the early Tokyo session, however, the overall sentiment is still risk-off. The US Dollar Index (DXY) is struggling to extend gains above 103.90, however, the upside looks favored as volatility in the FX domain might remain high ahead of the Federal Open Market Committee (FOMC) minutes. Rising odds of more rates announcement by the Fed in its March monetary policy meeting are fueling US treasury yields. The return on 10-year bonds has jumped to near 4%.
On the Swiss Franc front, the commentary from Swiss National Bank (SNB) Vice Chairman Martin Schlegel failed to provide strength to the Swiss franc. SNB Schlegel cited the central bank is “still willing” to be active in the foreign currency markets in pursuing its goal of price stability.
USD/CHF technical outlook
USD/CHF has successfully tested the breakout of the downward-sloping trendline placed from November 21 high around 0.9600 on a four-hour scale. Usually, a successful test of a trendline breakout with an absence of solid downside pressure indicates the strength of bulls and prepares a platform for a confident upside move ahead.
The Swiss Franc asset has confidently shifted its auction above the 200-period Exponential Moving Average (EMA) at 0.9245.
Meanwhile, the Relative Strength Index (RSI) (14) is looking to enter into the bullish range of 60.00-80.00.