USD/CHF retreats from near three-month tops, holds above mid-0.9000s

The USD/CHF pair jumped to the highest level since early December, around the 0.9085 region in the last hour, albeit quickly retreated few pips thereafter.

The pair built on the previous day's strong positive momentum and gained some follow-through traction for the second consecutive session on Wednesday. The uptick lacked any obvious fundamental catalyst and could be attributed to some cross-driven strength stemming from a strong rally in the EUR/CHF cross.

This comes on the back of the overnight sustained strength above the 100-day SMA and seemed to have prompted some technical buying. Apart from this, a turnaround in the global risk sentiment – as depicted by a goodish bounce in the equity markets – undermined the safe-haven Swiss franc and remained supportive.

That said, a weaker tone surrounding the US dollar held bulls from placing aggressive bets and kept a lid on any further gains for the USD/CHF pair. The USD was pressured by a modest pullback in the US Treasury bond yields, which started losing steam after Fed Chair Jerome Powell's dovish comments on Tuesday.

During the first day of his semi-annual testimony before the Congress, Powell reiterated that interest rates will remain low and the Fed will keep buying bonds to support the US economic recovery. This makes it prudent to wait for some follow-through buying before traders start positioning for any further appreciating move.

Wednesday's US economic docket highlights the only release of New Home Sales data. Hence, the key focus will remain on Powell's second day of the semi-annual testimony before Congress. This might influence the USD price dynamics and produce some short-term trading opportunities around the USD/CHF pair.

Technical levels to watch