USD/CHF stages a strong recovery from one-week low, retakes 0.9200 mark amid stronger USD

• USD/CHF regained positive traction on Thursday and snapped four days of the losing streak.
• Modest USD strength extended some support; a softer risk tone might cap any further gains.
• Investors now look forward to the US ISM Services PMI for some meaningful trading impetus.

The USD/CHF pair maintained its bid tone heading into the European session and was last seen trading near the daily high, just above the 0.9200 round-figure mark.

The pair attracted fresh buying on Thursday and reversed a major part of the overnight losses to a one-week low. This marked the first day of a positive move for the USD/CHF pair in the previous five and was sponsored by a goodish pickup in the US dollar demand, though any meaningful upside still seems elusive.

As investors digested Wednesday's dismal US ADP report, the USD stalled its recent sharp pullback from the 18-month high and drew some support from hawkish Fed expectations. Investors seem convinced that the Fed will tighten its monetary policy at a faster pace than anticipated to contain stubbornly high inflation.

Apart from this, the USD uptick could further be attributed to some repositioning trade ahead of the key central bank event risks – the Bank of England and the European Central Bank meetings. That said, diminishing odds for a 50 bps Fed rate hike in March might hold back the USD bulls from placing aggressive bets.

Moreover, the conflict between Russia and the West over Ukraine could benefit the safe-haven Swiss franc and cap gains for the USD/CHF pair, at least for the time being. Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of Friday's release of the US NFP report.

In the meantime, traders will take cues from Thursday's release of the US ISM Services PMI, due later during the early North American session. This, along with the broader market risk sentiment and the BoE/ECB-inspired volatility, should allow traders to grab some short-term opportunities around the USD/CHF pair.

Technical levels to watch