The U.S. dollar traded sharply higher against all of the major currencies today as the fundamentals we have been highlighting returned as drivers for the currency. On Tuesday when the greenback tanked for the seventh day in a row versus the Japanese Yen we said hawkish Fed speak and stronger data meant that further losses were limited. Today, a series of healthy U.S. economic reports followed by a positive Beige book carved out a bottom for the U.S. dollar. The currency’s rebound was then magnified by optimistic comments from Janet Yellen. U.S. rates also shot higher with 10 year yields rising nearly 10bp, validating the reversal in market sentiment. So unless Donald Trump attacks the dollar again on Friday, we’ve seen the end to a month of losses in the greenback. With oil prices rising, inflation ticked up in the month of December. Industrial production is also up and according to the Beige book, a number of Fed districts reported tightening job market, higher wages and increased inflation. Even Janet Yellen admitted that they are close to reaching their goals

Technically, USDCHF is still in a downtrend but with the dollar rising strongly against all other currencies, we think its only a matter of time before this pair catches up. Resistance is right above 1.01 (near 1.0110) according to the 4 hour chart included so we’ve set the profit target on our long trade just under 1.01 at 1.0097.