USD/CHF spikes to over one-month high, around 0.9300 neighbourhood

The USD/CHF pair jumped to a near one-month high during the first half of the European session and might now be looking to extend the momentum beyond the 0.9300 mark.

Following a brief consolidation earlier this Tuesday, the USD/CHF pair gained strong positive traction for the second successive day and built on the overnight rally from the 0.9160 area. The Swiss franc was weighed down by some verbal intervention by the Swiss National Bank on Monday, reiterating its pledge to intervene in the currency markets and a goodish rebound in the equity markets. This, in turn, was seen as a key factor that acted as a tailwind for the major.

The global risk sentiment got a strong lift amid a report that the European Union (EU) is set to outline a plan this week to jointly issue bonds on a potentially massive scale to finance energy and defence spending. This, to a larger extent, helped offset modest US dollar pullback from the highest level since May 2020 and did little to hinder the intraday move up. That said, the worsening situation in Ukraine, along with the risking risk of stagflation, kept a lid on the optimism. This might continue to benefit the greenback's status as the global reserve currency.

Apart from this, a sharp intraday spike in the US Treasury bond yields supports prospects for the emergence of some USD dip-buying. This, in turn, suggests that the path of least resistance for the USD/CHF pair is to the upside. Hence, a subsequent strength beyond the 0.9300 mark, towards testing 2022 high, around the 0.9335-0.9340 region, remains a distinct possibility. In the absence of any major market-moving economic releases, the focus will remain glued to fresh developments surrounding the Russia-Ukraine saga.

Technical levels to watch