USD/CHF extends gains above 0.9850 after Fed minutes

Greenback rallied across the board after the release of the FOMC minutes. The document triggered speculations about a rate hike in June and boosted USD/CHF to the upside.

The pair was already trading above an important technical resistance that was the 0.9800 area. It climbed 50 pip in a few minutes, breaking previous daily highs and peaked at 0.9865, the strongest level since March 16.

According to the minutes, officials saw a rate hike in June likely if the economy continues to improve. Another signal of a possible hike was that “some (official) were concerned that market participants may not have properly assessed the likelihood of an increase in the target range at the June meeting, and they emphasized the importance of communicating clearly over the intermeeting period how the committee intends to respond to economic and financial developments”.

Eyes on 0.9900 and beyond

With the consolidation and the break of the strong barrier around 0.9800 and the subsequent impulse to the US dollar from the Fed minutes, the pair could continue to rally toward 0.9900. If it breaks above the next resistance could be the 0.9950/55 area followed by the parity level.

A decline below 0.9800 would remove momentum to the US dollar, signaling a potential bearish correction, but from a technical perspective the pair has a bullish bias. Also today the short-term fundamental outlook also favors the US dollar as market participants re-position after the minutes.