USD/CHF touches fresh daily high amid risk-on mood, softer USD acts as a headwind

• USD/CHF regains positive traction on Tuesday and reverses a major part of the overnight losses.
• A generally positive risk tone undermines the safe-haven CHF and lends support to the major.
• The Fed’s less hawkish outlook keeps the USD bulls on the defensive and might cap the upside.

The USD/CHF pair attracts some buyers near the 0.9135 region on Tuesday and spikes to a fresh daily high during the early part of the European session. The pair is currently placed around the 0.9180 area and has now reversed a major part of the previous day's losses.

Receding fears of a full-blown banking crisis remain supportive of a generally positive risk tone, which, in turn, undermines the safe-haven Swiss Franc (CHF) and pushes the USD/CHF pair higher. The takeover of Silicon Valley Bank by First Citizens Bank & Trust Company calmed market nerves about the contagion risk. Furthermore, regulators reassured that they stood ready to address any liquidity shortfalls helped reverse the recent negative sentiment and boosted investors' appetite for perceived riskier assets.

The US Dollar (USD), on the other hand, remains under some selling pressure for the second successive day and might hold back traders from placing aggressive bullish bets around the USD/CHF pair. The USD continues to be weighed down by the fact that the Federal Reserve toned down its approach to reining in inflation. This, along with a modest decline in the US Treasury bond yields, turn out to be another factor weighing on the buck and warrants caution before positioning for any further appreciating move for the major.

Market participants now look to Tuesday's US economic docket - featuring the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index. Apart from this, the US bond yields, might influence the USD price dynamics and provide some impetus to the USD/CHF pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities. The focus, however, will remain on the release of the Fed's preferred inflation gauge - the US Core PCE Price Index on Friday.

Technical levels to watch