USD/CHF surrenders a major part of its intraday gains, holds above 0.9100 mark

• USD/CHF struggled to preserve its modest intraday gains amid the risk-off mood.
• Modest USD strength extended some support to the major and helped limit losses.
• Investors might also prefer to wait on the sidelines heading into the FOMC meeting.

The USD/CHF pair surrendered a major part of its intraday gains and was last seen trading just a few pips above the daily low, around the 0.9120 region.

Having defended the 0.9100 mark, the USD/CHF pair gained some positive traction on the first day of a new week amid the emergence of some US dollar buying. Firming expectations for an eventual Fed lift-off in March turned out to be a key factor that underpinned the greenback and extended some support to the major.

That said, an intraday pullback in the US Treasury bond yields held back the USD bulls from placing aggressive bets. On the other hand, a generally weaker risk tone benefitted the safe-haven Swiss franc. This, in turn, kept a lid on any meaningful upside for the USD/CHF pair, rather prompted fresh selling at higher levels.

The markets remain concerned about the earnings outlook for companies amid the prospects for a faster policy tightening by the Fed. This, along with escalating geopolitical tensions between Russia and Ukraine as well as in the Middle East, further weighed on investors' sentiment and led to a further decline in the equity markets.

That said, the downside is likely to remain limited as investors might prefer to wait on the sidelines ahead of the key central bank event risk. The Fed is scheduled to announce the outcome of a two-day monetary policy meeting on Wednesday. This will influence the USD and provide a fresh directional impetus to the USD/CHF pair.

In the meantime, traders on Monday will take cues from the US economic docket – featuring the release of the flash PMI prints (Manufacturing and Services). This, along with the US bond yields, will drive the USD demand. Apart from this, the broader market risk sentiment might further produce some short-term opportunities around the USD/CHF pair.

Technical levels to watch