USD/CHF struggles for a firm intraday direction, stuck in a range below mid-0.9300s

• USD/CHF was seen consolidating its recent gains recorded over the past four trading sessions.
• The Fed’s hawkish outlook continued underpinning the USD and acted as a tailwind for the pair.
• A softer risk tone benefitted the safe-haven CHF and capped gains amid retreating US bond yields.

The USD/CHF pair extended its sideways consolidative price move through the first half of the European session and was last seen trading around the 0.9330-0.9325 region, nearly unchanged for the day.

Following the recent strong rally of over 150 pips from sub-0.9200 levels, the USD/CHF pair now seems to have entered a bullish consolidation phase and oscillated in a range on Thursday. The prevalent cautious market mood underpinned safe-haven assets, which benefitted the Swiss franc and acted as a headwind for spot prices. That said, the downside remains cushioned amid the underlying bullish sentiment surrounding the US dollar, bolstered by the Fed's hawkish outlook.

In fact, the latest FOMC minutes released on Wednesday showed that policymakers were prepared to hike interest rates by 50 bps as inflation was well above target and risks were to the upside. The minutes also showed general agreement over the need to reduce the central bank’s massive balance sheet at a maximum pace of $95 billion per month to tighten financial conditions. This, in turn, pushed the USD to a nearly two-year high and continued lending some support to the USD/CHF pair.

Meanwhile, the anti-risk flow was reinforced by modest pullback in the US Treasury bond yields. This held back the USD bulls from placing any aggressive bets and kept a lid on any meaningful gains for the USD/CHF pair. Nevertheless, the fundamental backdrop supports prospects for an extension of the short-term uptrend witnessed over the past one week or so. Traders now look forward to the US Weekly Initial Jobless Claims data for some impetus during the early North American session.

Apart from this, the US bond yields will influence the USD price dynamics and produce some short-term trading opportunities around the USD/CHF pair. Traders will further take cues from developments surrounding the Russia-Ukrain saga. The incoming geopolitical headlines would play a key role in driving the broader market risk sentiment and demand for traditional safe-haven assets.

Technical levels to watch