USD/CHF refreshes daily top, around 0.9220 area

• USD/CHF caught fresh bids on Thursday and was supported by a combination of factors.
• The USD continued drawing support from rising bets for eventual Fed rate hike in 2022.
• Stability in the equity markets offset Omicron fears and undermined the safe-haven CHF.

The USD/CHF pair maintained its bid tone through the early European session and was last seen hovering near the daily swing high, around the 0.9215-20 region.

Following the previous day's good two-way price moves, the USD/CHF pair regained positive traction on Thursday and was supported by the emergence of fresh buying around the US dollar. Growing acceptance that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation continued acting as a tailwind for the greenback.

In fact, the markets started pricing in the possibility of at least a 50 bps rate hike by the end of 2022 in reaction to the Fed Chair Jerome Powell's hawkish comments. Powell said it's time to retire the word transitory as the risk of persistently higher inflation has increased. He further signalled that the Fed could speed up the tapering of its asset purchases.

This, along with rebounding US Treasury bond yields, extended some support to the USD. Apart from this, signs of stability in the equity markets helped offset concerns that the spread of the new variant of the coronavirus could derail economic recovery. This, in turn, undermined the safe-haven Swiss franc and provided a goodish lift to the USD/CHF pair.

From a technical perspective, the recent pullback showed some resilience below the very important 200-day SMA. Hence, Thursday's uptick could also be attributed to some short-covering move from a technically significant moving average. It, however, remains to be seen if the USD/CHF pair is able to capitalize on the move or meets with a fresh supply at higher levels.

Market participants now look forward to the US economic docket, featuring the release of Challenger Job Cuts and the usual Weekly Initial Jobless Claims. This, along with speeches by influential FOMC members, will influence the USD. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/CHF pair.

Technical levels to watch