USD/CHF climbs beyond mid-0.9100s, fresh weekly tops ahead of FOMC minutes
|- USD/CHF gained some follow-through traction for the second consecutive session on Wednesday.
- A combination of factors might hold bulls from placing fresh bets and cap the upside for the major.
- The FOMC meeting minutes might provide a fresh directional impetus amid a subdued USD demand.
The USD/CHF pair traded with a mild positive bias through the early North American session and was last seen hovering near three-day tops, around the 0.9160 region.
Following an early dip to the 0.9125 area, the USD/CHF pair regained positive traction for the second successive day and built on the overnight bounce from sub-0.9100 levels, or over one-week lows. The uptick lacked any obvious fundamental catalyst and could be solely attributed to some repositioning trade ahead of Wednesday's key release of the FOMC minutes.
Investors will look for clues about the likely timing of when the Fed will begin tapering its asset purchases. This will play a key role in influencing the near-term US dollar price dynamics and provide a fresh directional impetus to the USD/CHF pair. In the meantime, a combination of factors might hold bulls from placing aggressive bets and cap any further gains.
Persistent COVID-19 jitters, along with political tensions in Afghanistan continued weighing on investors' sentiment. This was evident from a generally weaker tone around the equity markets, which tends to benefit the safe-haven Swiss franc. Apart from this, a subdued US dollar price action might further keep a lid on any meaningful upside for the USD/CHF pair.
Diminishing odds for an early policy tightening by the Fed kept the USD bulls on the defensive amid absent relevant market moving economic releases from the US. However, a goodish pickup in the US Treasury bond yields acted as a tailwind for the greenback and extended some support to the USD/CHF pair, though the fundamental backdrop warrants caution for bulls.
Hence, it remains to be seen if the USD/CHF pair is able to capitalize on the move or meets with some fresh supply at higher levels. This makes it prudent to wait for some strong follow-through buying before confirming that the recent pullback from over one-month lows has run its course and positioning for any further appreciating move.
Technical levels to watch
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