USD/CHF retraces majority of daily gains ahead of FOMC

The USD/CHF pair reached its fresh weekly highs at 0.9688 during the European trading hours and started give back its earnings before the FOMC releases its June meeting minutes later in the NA session. As of writing, the pair is trading at 0.9670, up 0.2% on the day.

The pair's upsurge in the first half of the day has been fueled by the greenback strength. As the trading volume increased again after yesterday's holiday in the U.S., the USD picked up from where it left off and continued to gain traction against its rivals, pushing the US Dollar Index do a session high of 96.25. At the moment, the index is at 96.20, up 0.2% on the day. Investors will look for the next USD catalyst at the June FOMC minutes, which will be released at 18 GMT. An optimistic tone could provide an additional boost to the greenback while a cautious approach by the MPC could make it difficult for the index to continue its recent uptrend.

Analysts at Nomura explain that with markets largely expecting the balance-sheet adjustment announcement in September and the next rate hike more uncertain, more attention may be given to any part of the minutes that hint at how participants view the trajectory of the policy rate path and how sensitive another rate hike in 2017 would be to upcoming inflation data.

• US: All eyes on FOMC minutes – TDS

On the other hand, geopolitical tension surrounding North Kora continues to keep the participants on the edge and the CHF could find demand as a safe haven in the upcoming days if the situation escalates.

• North Korea: Escalation of the threat – Deutsche Bank

Technical outlook

0.9675 (20-DMA) could be seen as the initial technical hurdle for the pair ahead of 0.9735 (Jun. 26 high) and 0.9800 (psychological level/May 30 high). On the flip side, short-term supports locate at 0.9600 (psychological level), 0.9550 (Jun. 29 low) and 0.9500 (psychological level).