USD/CHF soars and trades near two-year-highs around 0.9610s

• The USD/CHF remains bullish and is up in the month by 4.50%.
• China’s Covid-19 outbreak, Ukraine’s conflict, and a firm US dollar weighed on the CHF.
• USD/CHF Price Forecast: The steepness of the uptrend suggests consolidation might lie ahead.

On Tuesday, the USD/CHF rallied for the third consecutive day and reached a 21-month high at 0.9626. However, as the Asian Pacific session begins, the USD/CHF print modest losses of 0.06%, down from YTD highs, and is trading in the high 0.9610s at the time of writing.

The market mood soared on the back of increasing Covid-19 cases in China. Its last outbreak, which began in Shanghai, triggered lockdowns and isolations. However, contagion expanded to some districts of Beijing and also Mongolia. That keeps investors worried because the Chinese authorities’ zero-covid policy, alongside increasing infections, creates the perfect storm to disrupt the supply side and trigger a raft of inflation.

Elsewhere, the Ukraine-Russia conflict keeps grabbing some headlines. The Polish company PGNIG said that Russia would stop gas deliveries starting April 27^th, and they need to be paid in Russian roubles. Later, the retaliation reached Bulgaria, as Gazprom halted gas deliveries, as reported by Reuters.

On Tuesday, the USD/CHF meandered in the 0.9560-90 area, but near the close of Wall Street, broke decisively above the 0.9600 figure, and closed near the YTD high at 0.9623.

USD/CHF Price Forecast: Technical outlook

The USD/CHF remains upward biased and is just shy of June’s 5 2020 swing high around 0.9650. Nevertheless, the USD/CHF’s steeper upside move triggered a sharp move in the Relative Strength Index (RSI) to 75.85, well within overbought conditions, signaling that the USD/CHF might be headed for consolidation before resuming the uptrend.

If that scenario plays out, the USD/CHF’s first support would be the daily pivot at 0.9600. A breach of the latter would expose the 50-1 hour simple moving average (SMA) above the S1 daily pivot, each at 0.9586 and 8.9580, respectively, followed by April’s 26 daily low of 0.9564.

However, if the USD/CHF continues trending up, the USD/CHF’s first resistance would be the YTD high at 0.9626. Once cleared, the next supply zone would be the confluence of the R1 daily pivot and June’s 5 2020 cycle high around 0.9650, followed by the R2 daily pivot at 0.9670, short of the 0.9700 mark.