- The decline in safe haven demand weighed on the CHF and helped USD/CHF regain positive traction.
- The modest USD weakness prevented the bulls from making aggressive bets and capped any further gains.
- Investors are eagerly awaiting the US retail sales data to gain some momentum ahead of the FOMC Minutes.
The pair USD/CHF traded with a slight positive bias heading into the American session and was last seen a few pips below the daily high, around the 0.9250-0.9255 region.
The USD/CHF pair attracted fresh buying on Wednesday and moved back near overnight highs amid easing tensions between Russia and Ukraine, undermining the Swiss franc’s safe-haven status. Indeed, Russia announced on Tuesday that some of its troops positioned near the Ukrainian border were returning to bases after completing exercises. This helped ease market concerns about a further escalation of the conflict between Russia and the West, which, in turn, boosted investor confidence.
On the other hand, a softer tone around US Treasury yields kept the US dollar on the defensive and failed to impress bullish traders or provide any additional lift to the USD/CHF pair. That said, the growing acceptance that the Fed will tighten monetary policy at a faster pace than anticipated could continue to act as a tailwind for the USD. This, in turn, supports the prospects for some nose-diving USD buying and a further short-term appreciation move for the USD/CHF pair.
Traders, however, might refrain from making aggressive bets and prefer to wait for a further catalyst from the FOMC meeting minutes, due later in the US session. Meanwhile, the monthly retail sales figures for The US, along with US bond yields, will play a key role in influencing USD price dynamics. Aside from this, the broader market risk sentiment could give the USD/CHF pair some lift and allow traders to take advantage of some short-term opportunities.
Technical levels
Source: Fx Street
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