USD/CHF holds steady near multi-month tops, around mid-0.9300s

The USD/CHF pair traded with a mild positive bias through the first half of the European session and was last seen hovering around mid-0.9300s, just below multi-month tops touched on Wednesday.

The risk-on mood – as depicted by a strong rally in the equity markets – undermined the safe-haven Swiss franc and assisted the USD/CHF pair to gain traction for the sixth straight session on Thursday. On the other hand, the US dollar was seen consolidating its recent gains to one-year tops and did little to inspire bulls or provide any additional boost to the major.

The greenback had gained strong positive traction over the past one week or so amid expectations that the Fed will begin rolling back its massive pandemic-era stimulus as soon as November. Adding to this, the markets also seem to have started pricing in the possibility of a Fed rate hike in 2022, which was evident from the recent upsurge in the US Treasury bond yields.

However, the looming US debt ceiling, along with a modest pullback in the US bond yields held the USD bulls from placing fresh bets. Nevertheless, prospects for an early policy tightening by the Fed might continue to act as a tailwind for the greenback. This, in turn, supports prospects for an extension of the USD/CHF pair one-week-old appreciating move from the 0.9220 area.

Even from a technical perspective, the overnight move beyond the previous monthly swing highs, around the 0.9330-35 region adds credence to the constructive outlook for the USD/CHF pair. Hence, a subsequent strength beyond the 0.9375 intermediate hurdle, towards reclaiming the 0.9400 round-figure mark, remains a distinct possibility.

Market participants now look forward to the US economic docket, highlighting the final GDP print and Weekly Initial Jobless Claims. Apart from this, Fed Chair Jerome Powell's testimony and the US bond yields will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the USD/CHF pair.

Technical levels to watch