USD/CHF retreats from 11-month high at 0.9390, Fed’s policy eyed

• USD/CHF is addressing a corrective pullback from 0.9386, may resume an upside journey soon.
• A broader risk-aversion theme has supported the major to record a fresh 11-month high at 0.9390.
• The DXY is underpinned by escalating war tensions, upcoming Fed policy, and renewed Covid-19 fears.

The USD/CHF pair has witnessed some long liquidation after registering a fresh 11-month high at 0.9390 amid a broader risk-aversion theme in the market. The major has been rallying higher from the last three trading sessions as investors are underpinning the greenback against the Swiss franc ahead of the interest rate decision from the Federal Reserve (Fed).

The geopolitical tensions between Russia and Ukraine have escalated further as the US told the Western leaders that China is aiming to provide military assistance to Russia after being a neutral voter. It is worth noting that China has close ties with Russia earlier. Therefore, the US believes that China is attempting a bail-out to Russia post the sanctions imposed by the Kremlin after Russia’s invasion of Ukraine.

In response to that China has denied any kind of request from Moscow. Moreover, Russia has also denied making any request to China.

On the dollar front, the US dollar index (DXY) is awaiting a decisive trigger to claim the 100.00 mark. Despite a lot of positive triggers such as Russia-Ukraine war escalation, renewed Covid-19 fears in China, and likely aggressive monetary policy dictation from the Fed Chair Jerome Powell, the DXY is failing to locate a fresh impulsive wave that could drive the DXY at 100.00.

Meanwhile, the 10-year US Treasury yields have surpassed 2.41% on rising expectations of a 50 basis points (bps) interest rate hike by the Fed.