Forexpros – The U.S. dollar was trading close to a four-month high against the Swiss franc on Monday, as concerns over the ongoing debt crisis in the euro zone boosted demand for the dollar after last week’s intervention by the Swiss National Bank diminished the franc’s safe haven appeal.
USD/CHF hit 0.8927 during European morning trade, the pair’s highest since May 16; the pair subsequently consolidated at 0.8853, gaining 0.22%.
The pair was likely to find support at 0.8705, Friday’s low and short-term resistance at 0.9010, the high of April 20.
Concerns that the debt crisis in the euro zone is escalating mounted following media reports that Germany’s government has planned to firewall the country’s banking sector in the event that Greece is forced to default on its debts.
Earlier Monday, Greece’s deputy finance minister said the country has cash to operate until next month.
Meanwhile, last week’s resignation of European Central Bank governing council member Juergen Stark, amid reported disagreements over the bank’s bond buying program, highlighted divisions among senior policymakers over the handling of the region’s debt crisis.
Last week, Switzerland’s central bank set a minimum exchange rate target of 1.20 per euro for the Swiss franc. The move came after a month long campaign to weaken the franc failed to stem safe haven inflows into the currency, as concerns over the outlook for global growth mounted.
Elsewhere, the Swissie was trading close to its exchange rate ceiling against the euro, with EUR/CHF slipping 0.17% to hit 1.2044.
Later Monday, German Chancellor Angela Merkel was to hold talks on the euro zone debt crisis with European Commission President Jose Manuel Barroso.
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