Photo by Claudio Schwarz on Unsplash
 

• The USD/CHF pair has jumped by more than 7% from the YTD low.
• The US dollar index (DXY) has been in a strong bullish trend.
• Focus now shifts to the upcoming non-farm payrolls (NFP) data.

The USD/CHF exchange rate has risen in the past 12 straight weeks as the US dollar index (DXY) continued soaring. The pair jumped to a high of 0.9240, the highest point since March 20th. It has jumped by more than 7% from the lowest level this year.
 

US dollar index rally continues

The USD/CHF pair continued soaring as the US dollar index (DXY) continued soaring. The DXY index, which tracks the greenback against a basket of currencies, has also risen in the past 12 weeks and is sitting at its highest point since November 2022.

The US dollar rally gained steam as investors embraced a risk-off sentiment in the market. This happened as the number of risks in the market continued. For example, there are elevated risks of a government shutdown after the House of Representatives ousted Speaker Kevin McCarthy.

There are also risks in the bond market, where the 30-year Treasury yield soared to 5.0% for the first time in more than a decade. The 10-year yield jumped to 4.7% as the bond sell-off gained momentum. As I wrote here, billionaire Jeff Gundlach of DoubleLine Capital warned of the risks of a recession.

The US Treasury yield curve is de-inverting very rapidly. Was at -108 bp a few months ago. Now at -35 bp. Should put everyone on recession warning, not just recession watch. If the unemployment rate ticks up just a couple of tenths it will be recession alert. Buckle up.

— Jeffrey Gundlach (@TruthGundlach) October 4, 2023

The next important catalyst for the USD/CHF exchange rate will be the upcoming US non-farm payrolls (NFP) data. Economists polled by Reuters expect the data to show that the NFP dropped from 187k in August to 163k in September.

The unemployment rate is expected to come in at 3.7% while the average hourly earnings rose by 4.3%. A report by ADP on Wednesday showed that the private sector added just 89k jobs in September, the smallest increase in years.

The Federal Reserve and the Swiss National Bank (SNB) will not meet this month. The Fed will meet on November 1 while the SNB will meet on December 14th.
 

USD/CHF technical analysis

(Click on image to enlarge)

USD/CHF chart by TradingView

The daily chart shows that the USD/CHF exchange rate has been in a strong bullish trend in the past few months. The pair has jumped above the 38.2% Fibonacci Retracement level. It has risen above the 200-day and 50-day moving averages. The MACD has moved above the neutral point and is nearing at 0.01.

Therefore, the pair will likely continue rising as buyers target the 50% retracement level at 0.9330. The stop-loss of this trade will be at 0.900.

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