USD/CHF struggles for a firm intraday direction, stuck in a range around mid-0.9200s

• USD/CHF struggled to gain any meaningful traction and remained confined in a range on Monday.
• Geopolitical tensions benefitted the CHF’s safe-haven status and acted as a headwind for the pair.
• Hawkish Fed expectations, elevated US bond yields underpinned the USD and help limit any losses.

The USD/CHF pair seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, around mid-0.9200s.

A combination of diverging forces failed to provide any meaningful impetus to the USD/CHF pair and led to subdued/range-bound price moves on the first day of a new week. The risk-off mood benefitted the safe-haven Swiss franc and acted as a headwind. That said, expectations for a more aggressive Fed acted as a tailwind for the US dollar and extended support to the major.

Worries over an imminent Russian invasion of Ukraine took its toll on the global risk sentiment, which was evident from a generally weaker tone around the equity markets. In fact, the US National Security Advisor Jake Sullivan warned on Sunday that “we are in the window where a Russian invasion of Ukraine could begin at any time and could happen during the Beijing winter Olympics.”

On the other hand, the USD continued drawing support from rising bets for a 50 bps Fed rate hike in March, which was further boosted by the red-hot US CPI last week. This was reinforced by elevated US Treasury bond yields, which should continue to underpin the greenback and the USD/CHF pair, at least for now, amid absent relevant market moving economic releases from the US.

Traders now look forward to comments from St. Louis Fed President James Bullard, who called for 100 bps rate hikes over the next three FOMC policy meetings. Apart from this, the US bond yields will influence the USD price dynamics. This, along with geopolitical developments and the broader market risk sentiment, might produce some trading opportunities around the USD/CHF pair.

Technical levels to watch