USD/CHF climbs to near three-week high, reclaims 0.9700 ahead of FOMC minutes

• A combination of factors pushed USD/CHF higher for the fifth successive day on Wednesday.
• The risk-on impulse undermined the safe-haven CHF and extended some support to the pair.
• The underlying USD bullish provided an additional lift ahead of the FOMC meeting minutes.

The USD/CHF pair gained some positive traction for the fifth successive day on Wednesday and climbed to a two-and-half-week high during the first half of the European session. The uptick lifted spot prices back above the 0.9700 mark and was sponsored by a combination of factors.

The risk-on impulse - as depicted by a strong recovery in the global equity markets - undermined demand for the safe-haven Swiss franc. This, along with the prevalent bullish sentiment surrounding the US dollar, acted as a tailwind for the USD/CHF pair and remained supportive.

In fact, the USD stood tall near a two-decade peak and continued drawing support from expectations that the Fed would hike interest rates at a faster pace to combat stubbornly high inflation. The bets were reaffirmed by last week's hawkish remarks by Fed Chair Jerome Powell.

Speaking at the ECB Forum in Sintra, Powell said that the Fed remains focused on getting inflation under control and that the US economy is well-positioned to handle tighter policy. Hence, the market focus will remain glued to the release of the minutes from the latest FOMC meeting.

Investors will look for fresh clues about the Fed's policy tightening path. The focus would then shift to the closely-watched US monthly jobs report (NFP) on Friday. This will influence the near-term USD price dynamics and provide a fresh directional impetus to the USD/CHF pair.

Technical levels to watch