- USD/CHF is struggling to gain any significant traction and remains stuck in a range on Monday.
- Geopolitical tensions benefit the safe haven CHF and weigh on the pair.
- Aggressive Fed expectations and high US bond yields support the USD and help limit any further losses in the pair.
The USD/CHF trades between timid gains and minor losses during the European session on Monday, moving sideways around 0.9250.
A combination of divergent factors failed to provide any significant lift to the USD/CHF pair and led to moderate and range-bound price moves on the first day of a new week. Risk-off status benefited the safe-haven Swiss franc and acted as a headwind for the pair. Having said that, expectations of a more aggressive Fed acted as a tailwind for the US dollar and offered support to USD/CHF.
concerns for a impending Russian invasion of Ukraine weighed on global risk sentiment, which was evident by a weaker tone around equity markets. Indeed, US National Security Adviser Jake Sullivan warned on Sunday that “we are in the window where a Russian invasion of Ukraine could start at any moment and could happen during the Winter Olympics in Beijing“.
On the other hand, USD continued to find support from rising expectations of a 50bp rate hike from the Fed in March, which was further buoyed by the red-hot US CPI. This was reinforced by elevated US Treasury yields, which should continue to support the dollar and the USD/CHF pair, at least for now, amid the absence of any relevant economic releases from the US on Monday.
Invesoes now await comments from the St. Louis Fed president, James Bullard, who called for rate hikes of up to 100 basis points at the next three FOMC monetary policy meetings. Aside from this, US bond yields will influence USD price dynamics. This coupled with geopolitical developments and market risk sentiment could create some opportunities around the USD/CHF pair.
USD/CHF technical levels
Source: Fx Street
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