USD/CHF remains confined in a range below 0.9100 mark and 100-day SMA

The USD/CHF pair edges higher for the second successive day on Wednesday, albeit lacks follow-through and remains well within over a one-week-old trading band. Spot prices hover around the 0.9075-0.9080 region during the early part of the European session, below a technically significant 100-day Simple Moving Average (SMA) and a nearly two-month high touched last week.

As investors seek clarity on the Federal Reserve's (Fed) next policy move, the US Dollar (USD) trades with a mild positive bias and is seen as a key factor lending as a tailwind for the USD/CHF pair. It is worth recalling that the recent inflation and labour market data from the US kept alive hopes for a 25 bps lift-off at the June  FOMC meeting. However, dovish rhetoric by several Fed officials last week lifted market bets for an imminent pause in the US central bank's policy tightening cycle.

In fact, current market pricing indicates a greater chance that the Fed will leave interest rates unchanged next week. This leads to a further decline in the US Treasury bond yields, which continues to act as a headwind for the Greenback. Apart from this, the prevalent cautious mood benefits the safe-haven Swiss Franc (CHF) and contributes to capping the upside for the USD/CHF pair, warranting some caution for aggressive bullish traders and positioning for any meaningful appreciating move.

Weaker-than-expected Chinese trade balance data, showing that surplus sank to a 13-month low in May in the wake of a surprise 7.5% slump in exports, add to worries about a global economic slowdown. This, in turn, weighs on investors' sentiment and is evident from a generally weaker tone around the equity markets. Hence, a strong follow-through buying is needed to support prospects for an extension of a one-month-old recovery move from a 15-month low touched in May.

There isn't any relevant market-moving economic data due for release from the US on Wednesday, leaving the USD at the mercy of the US bond yields. Apart from this, the broader risk sentiment will drive demand for the safe-haven CHF and contribute to producing short-term trading opportunities around the USD/CHF pair.

Technical levels to watch