- USD/CHF gained traction for the third successive day amid a broad-based USD strength.
- Surging US bond yields continued acting as a tailwind for the USD and remained supportive.
- The risk-off impulse benefitted the safe-haven CHF and capped the upside for the major.
The USD/CHF pair maintained its bid tone through the first half of the European session, albeit has retreated few pips from over one-week tops touched earlier this Tuesday. The pair was last seen trading around the 0.9275-80 region, still up nearly 0.25% for the day.
The pair built on last week's rebound from the 0.9215 support area and gained some follow-through traction for the third successive day. This also marked the fourth day of a positive move in the previous five and was sponsored by a broad-based US dollar strength, bolstered by surging US Treasury bond yields.
In fact, the yield on the benchmark 10-year US government bond to the highest level since June 17 amid prospects for an early policy tightening by the Fed. It is worth recalling that the Fed hinted that it would begin tapering bond purchases. Moreover, the dot plot showed policymakers' inclination to raise interest rates in 2022.
The supporting factor, to some extent, was offset by the risk-off impulse in the markets, which underpinned the safe-haven Swiss franc and capped gains for the USD/CHF pair. Investors remain worried about China Evergrande Group's unsolved debt crisis. This, along with intensifying energy crisis took its toll on the risk sentiment.
The USD/CHF pair, so far, has struggled to move back above the 0.9300 mark, making it prudent to wait for some follow-through buying before positioning for any further gains. The next relevant hurdle is pegged near the 0.9330-35 region, or multi-month tops touched last week, which should act as a pivotal point for short-term traders.
Market participants now look forward to Fed Chair Jerome Powell's testimony before the Senate Banking Committee. This, along with the release of the Conference Board's Consumer Confidence Index and the US bond yields, will influence the USD. Apart from this, the broader market risk sentiment could provide some impetus to the USD/CHF pair.
Technical levels to watch
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