USD/CHF moves further beyond mid-0.9200s, fresh daily high amid positive risk tone

The USD/CHF pair traded with a mild positive bias through the first half of the European session and was last seen hovering near the daily high, around the 0.9275 region. 

The pair attracted some dip-buying near the 0.9240 region on Monday and turned positive for the second successive day, with bulls looking to build on last week's bounce from sub-0.9200 levels. A generally positive tone around the equity markets undermined the safe-haven Swiss franc and acted as a tailwind for the USD/CHF pair. The uptick, however, lacked bullish conviction amid subdued US dollar demand.

The greenback, so far, has struggled to gain any meaningful traction as investors preferred to move on the sidelines ahead of the FOMC meeting minutes, scheduled for release on Wednesday. The markets seem convinced that the Fed would adopt a more aggressive policy stance to combat stubbornly high inflation. Hence, the minutes will be looked upon for fresh clues about the pace of policy tightening by the Fed.

In the meantime, rising bets for a 100 bps Fed rate hike move over the next two policy meetings remained supportive of high US Treasury bond yields. This, in turn, continued lending some support to the greenback and favours bullish traders. Some follow-through buying beyond Friday's swing high, around the 0.9280 region, will reaffirm the optimistic bias and pave the way for additional gains.

The uncertainty over Ukraine and talks of more sanctions against Russia should keep a lid on any optimistic move in the markets. This should continue to drive some haven flows towards the CHF and cap the upside for the USD/CHF pair, at least for the time being—the mixed fundamental backdrop warrants caution before placing aggressive directional bets amid missing relevant market-moving economic data.

Technical levels to watch