USD/CHF flirts with daily lows around mid-0.9100s, focus remains on US data/FOMC minutes

• USD/CHF turned lower for the second successive day and was pressured by a combination of factors.
• A softer risk tone benefitted the safe-haven CHF and exerted pressure amid subdued USD demand.
• The downside seems cushioned ahead of the US economic releases and the FOMC meeting minutes.

The USD/CHF pair remained on the defensive through the early European session and was last seen hovering near the daily low, around mid-0.9100s.

A combination of factors failed to assist the USD/CHF pair to capitalize on the overnight late bounce, instead attracted fresh sellers near the 200-day SMA, around 0.9165-70 region on Wednesday. An extended selloff in the US money markets led to a corrective pullback in the US tech stocks on Tuesday. The spillover effect was evident from a generally weaker trading sentiment around the equity markets, which, in turn, benefitted the safe-haven Swiss franc.

The flight to safety was reinforced by retreating US Treasury bond yields, which undermined the US dollar and exerted some pressure on the USD/CHF pair for the second successive day. That said, expectations for a faster policy tightening by the Fed should act as a tailwind for the greenback. In fact, the money markets have been pricing in the possibility for an eventual liftoff by May and two more interest rate hikes by the end of 2022.

Hence, the market focus will remain glued to Wednesday's release of the FOMC meeting minutes, due later during the US session. In the meantime, traders might take cues from the US macro data – the ADP report on private-sector employment, Building Permits and the final Services PMI. Apart from this, the US bond yields might influence the USD price dynamics, which along with the broader market risk sentiment should provide some impetus to the USD/CHF pair.

Technical levels to watch