USD/CHF rebounds sharply on US dollar strength, tests 0.9520

• US dollar gains momentum after US data and Powell’s initial testimony.
• US data: retail sales surpassed expectations, while industrial production rose below consensus in May.

The USD/CHF pair rebounded from two-day lows amid a recovery of the US dollar across the board and rose back above 0.9500. Recently it printed a fresh daily high at 0.9521 and remains near the top, with a strong bullish momentum.

Earlier on Tuesday, USD/CHF bottomed at 0.9462. From the low, it gained so far more than 50 pips. The rebound was boosted by a stronger US dollar, particularly against majors and more recently, it is also rising versus emerging market currencies as Wall Street reverses to the downside.

The rally of the greenback received a boost from US Retail Sales data that posted in May the biggest monthly gain on record. Later, Fed Chair Powell mentioned that if the market continues to function, the central bank will slow its corporate bond-buying program.

Market sentiment also deteriorated after the latest Covid-19 numbers from the US (particularly Florida) and after the Beijing City government increase their emergency response. The Chinese city will shut all schools, Bloomberg reported.

The deterioration in risk sentiment did not alter USD/CHF upside. The Swiss franc gained momentum against its European rivals but held under pressure versus the US dollar, the main winner of the day so far.

Levels to watch

The USD/CHF is testing the resistance around 0.9520/25; above attention would turn to the 0.9550/55 area, a critical resistance that if broken, should reinforce the bullish bias. On the flip side, now 0.9495 is the immediate support, followed by 0.9475 (June 15 low) and then 0.9450.