- USD/CHF attracts some buying on Monday, but lacks continuation.
- A positive risk tone weighs on the safe haven CHF and offers some support to the pair.
- The subdued demand around the USD limits any significant gains amid uncertainty over Ukraine.
The pair USD/CHF moves with a slight positive bias during the first half of the European session on Monday, holding close to the daily high around the 0.9275 region.
The pair attracted some buying near the 0.9240 region on Monday and turned positive for the second day in a row, with bulls looking to build on last week’s bounce from levels below 0.9200. A generally positive tone around equity markets weighed on the safe-haven Swiss franc and acted as a tailwind for the USD/CHF pair. The rally, however, lacked bullish conviction amid subdued demand for the US dollar.
Until now, the USD has struggled to gain any significant tractionas investors prefer to stay on the sidelines ahead of the release of the FOMC meeting minutesscheduled for Wednesday. The markets seem convinced that the Fed would adopt a more aggressive stance to combat stubbornly high inflation. Therefore, the minutes will be closely scrutinized for further clues about the pace of the Fed’s tightening of monetary policy.
In the meantime, rising expectations for a 100 basis point Fed rate hike in the next two meetings they continued to support high US Treasury yields. This, in turn, continued to lend some support to the USD and favors the bulls of the pair. Some continuation buying above Friday’s high around the 0.9280 region will reaffirm the upside bias and pave the way for further gains.
That said, the uncertainty over Ukraine, coupled with talk of more sanctions against Russia, should cap any bullish moves in the markets. This should continue to fuel some safe haven money flows into the CHF and cap the USD/CHF rally, at least for now. The mixed fundamental backdrop warrants some caution before opening aggressive directional positions amid the lack of any major economic data releases on Monday.
USD/CHF technical levels
Source: Fx Street
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