USD/CHF Held Back, Swiss Franc Remains a Safe Haven
USD/CHF moved cautiously around 0.7850–0.7870 on Monday, amidst a tug-of-war between a strengthening US dollar and demand for the Swiss franc as a safe haven. The dollar remains supported by expectations of higher Fed interest rates, while the franc is also sought after due to geopolitical uncertainty.
The US dollar's strength stems from changing market expectations regarding Fed policy. Markets are now starting to factor in the possibility of a December interest rate hike, following rising inflation risks due to energy prices and Middle East tensions. This situation keeps the dollar attractive due to its higher yield.
However, the rise in USD/CHF has not been particularly aggressive, as the Swiss franc is also supported by risk-off sentiment. When geopolitical conflicts escalate, investors tend to seek safe assets like the CHF. On the other hand, the Swiss National Bank has previously expressed concern about the franc's rapid appreciation.
Looking ahead, USD/CHF still has the potential for volatility. The 0.7850 area is a key level for buyers to guard, while the 0.7878–0.7900 area represents the closest resistance. If the dollar strengthens again along with US yields, the pair has the potential to rise. However, if safe-haven demand for the franc increases, USD/CHF could come under further pressure. (CP)
Source: Newsmaker.id