The USD/CHF pair added to its intraday gains and shot to a fresh daily high, around the 0.9180 region during the first half of the European session.
The pair witnessed a short-covering move on Thursday and moved away from the lowest level since November 10, around the 0.9145 region touched in the previous day. The recovery momentum lifted spot prices back above the very important 200-day SMA and was sponsored by a combination of supporting factors.
The underlying bullish tone in the markets undermined the safe-haven Swiss franc and provided a goodish lift to the USD/CHF pair amid resurgent US dollar demand. Despite the continuous surge in new COVID-19 cases, investors remain optimistic amid signs that the Omicron variant might be less severe than feared.
On the other hand, the greenback drew some support from the overnight spike in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot to 1.56% for the first time since November 29, while the two-year yield, which is sensitive to interest rate moves, rose to the highest since March 2020.
It, however, remains to be seen if the USD/CHF pair is able to capitalize on the move as investors might refrain from placing aggressive bets amid thin end-of-year trading volumes. Hence, it will be prudent to wait for a strong follow-through buying before confirming that the recent downtrend is over and placing fresh bullish bets.
Market participants now look forward to the US economic docket, featuring the releases of Weekly Initial Jobless Claims and Chicago PMI. This, along with the US bond yields, will influence the USD. Apart from this, traders might take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/CHF pair.
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