USD/CHF clings to gains above mid-0.8900s, lacks follow-through ahead of US CPI

The USD/CHF pair traded with a mild positive bias through the first half of the European session and was last seen hovering near daily tops, around the 0.8960-65 region.

The pair built on the previous day's bounce from the 0.8925 zone, or near four-month lows and gained some follow-through traction on Thursday. The uptick was supported by a modest US dollar strength and a generally positive tone around the equity markets, which tends to undermine the safe-haven Swiss franc.

The US dollar edged higher amid some repositioning trade ahead of the US consumer inflation figures for May, due later during the early North American session. Apart from this, a modest pickup in the US Treasury bond yields further benefitted the greenback. This, in turn, acted as a tailwind for the USD/CHF pair.

The uptick, however, lacked any strong follow-through buying as investors seemed reluctant to place any aggressive bets ahead of the key US CPI report. This will be an important macro data that would set the tone for the June FOMC meeting, which will influence the USD and provide a fresh directional impetus to the USD/CHF pair.

In the meantime, the combination of factors might continue to lend support to the USD/CHF pair. Hence, any meaningful dip is more likely to be bought into and remain limited, at least for the time being.

Technical levels to watch