• US dollar tumbles as bonds rise sharply.
• BoE buys bonds, triggers global rebound in stocks and commodities.
• USD/CHF accelerates correction from three-month highs.

The USD/CHF dropped sharply from the highest level in three months, near the parity area and bottomed at 0.9743, a one-week low. The pair remains below 0.9800 with a negative tone as the US dollar slides across the board.

The greenback weakened amid a rally in Treasuries and in equity markets. The announcement of the Bank of England buying gilts triggered sharp moves and activated a recovery in bonds. The BoE said it purchased on Wednesday £1.025B of gilts. US yields pulled back sharply from multi-year highs. The US 10-year yield dropped from above 4.00% to 3.76%.

The Swiss franc also rose versus the euro and the pound favored by the moves in the bond market.

Double top at 0.9960 and collapses

The USD/CHF rose earlier to test Monday’s top at 0.9965 and failed to break it, and then retreat sharply breaking below 0.9860, confirming a double top formation. The target of the formation is around 0.9730, near Wednesday’s low at 0.9744. A few pips below, awaits the 20-day Simple Moving Average at 0.9725.

A daily close under the 20-day SMA could change the bearish short-term bias to neutral or bearish. The US dollar needs to recovers levels above 0.9880 in order to strengthen again.

Technical levels