USD/CHF remained sideways below 0.9250, bulls look to US CPI on Thursday for further momentum

• USD/CHF witnessed two-way price moves on Tuesday before stabilizing in neutral territory.
• High US bond yields acted as a tailwind for the USD and helped limit any significant decline.
• Signs of stability in equity markets undermined the safe-haven CHF and acted as support.

The pair USD/CHF flickered between tepid gains and minor losses during the early American session and was last seen trading in neutral territory just below 0.9250.

Having risen to a one-week high, the USD/CHF pair witnessed some intraday selling and hit a daily low around the 0.9225 area during the latter part of the European session. However, a combination of factors acted as a tailwind and helped limit the fall. Signs of stability in equity markets undermined the safe haven Swiss franc and provided some support amid modest US dollar strength.

The USD gained some support from a further rally in US Treasury yields, fueled by prospects of faster policy tightening by the Federal Reserve. Indeed, markets have been pricing in the possibility of a 50bp rate hike at the March FOMC meeting. This, in turn, pushed the 10-year US government bond yield back closer to the 2% level and benefited the dollar.

That said, the USD/CHF pair has, thus far, struggled to gain significant traction as investors seemed reluctant to place aggressive bets ahead of the release of US consumer inflation figures on Thursday. The latest US CPI report could play a key role in determining the Fed’s near-term policy outlook, which, in turn, will boost USD demand and provide a further directional boost to the dollar. USD/CHF pair.

Meanwhile, US bond yields will continue to influence USD price dynamics and give the USD/CHF pair some momentum. Aside from this, traders will take note of the broader market risk sentiment to take advantage of some short-term opportunities amid the absence of any relevant economic releases in the US market.

Technical levels