USD/CHF near two-week highs in 0.9200 area as analysts speculate about potential SNB intervention

• USD/CHF hit its highest level in nearly two weeks on Tuesday amid CHF underperformance despite risk-off equity market flows.
• The pair is probing 0.9200, a break above which could open the door to a test of annual highs.
• Market commentators speculated that SNB intervention might be behind a portion of Tuesday’s weakness.

USD/CHF hit its highest level in nearly two weeks on Tuesday as the Swiss franc lost its safe-haven shine despite further downside in US (and global) equities and ongoing Italian political uncertainty. The pair broke to the north of its 200 and 21-day moving averages in the 0.9160 area and above last week’s peaks around 0.9180 and is now probing the 0.9200 level and the 50-day moving average just above it.  At current levels ever so slightly below the big 0.9200 figure, the pair is trading with gains of about 0.7% o the day, making it the standout worst performer in the G10 FX space on the day.

Market commentators speculated that SNB intervention might be behind a portion of Tuesday’s weakness. Traders should watch next Monday’s weekly Swiss sight deposit balance data for “confirmation”, with a sharp rise usually indicative of increased SNB CHF selling. Focus for the rest of the week will be dominated by Wednesday’s Fed policy announcement. Analysts suspect that the expected hawkish tone to this meeting (where the Fed will give the green light to a March rate hike and then QT later in the year), as well as the continued risk-off tone being seen in US equity markets, suggests upside risks for USD this week.

A big question will be, if markets continue to trade with a risk-off bias for the rest of the week, will safe-haven demand for CHF return? And would any return of safe-haven demand for the franc be enough to shield it from safe-haven demand from the buck? From a technical perspective, if USD/CHF manages a clean break above 0.9200, then a move back to 2022 and December 2021 highs near 0.9300 will be o the cards.