USD/CHF clings to gains near daily high, bulls eyeing 0.9300 mark amid stronger USD

• USD/CHF regained positive traction on Friday and inched back closer to the overnight swing high.
• Rising bets for a 50 bps Fed rate hike in March underpinned the buck and remained supportive.
• The risk-off impulse benefitted the safe-haven CHF and kept a lid on any further gains for the pair.

The USD/CHF pair maintained its bid tone through the first half of the European session and was last seen trading just a few pips below the daily high, around the 0.9275 region.

Following the overnight pullback from the vicinity of the 0.9300 mark, the USD/CHF pair caught fresh bids on Friday and inched back closer to the weekly high amid a broad-based US dollar strength. Firming expectations for a faster policy tightening by the Fed turned out to be a key factor that continued underpinning the greenback.

The US CPI report released on Thursday reinforced speculations that the Fed will adopt an aggressive policy stance to combat high inflation and boosted bets for a 50 bps rate hike in March. Moreover, St. Louis Fed President James Bullard said that the US central bank should hike rates by 100 basis points over the next three meetings.

This, in turn, pushed the yield on the benchmark 10-year US government bond beyond the 2% threshold for the first time since mid-2019. Adding to this, the 2-year note, which is highly sensitive to rate hike expectations, climbed to its highest level since January 2020, which further acted as a tailwind for the buck and the USD/CHF pair.

That said, the risk-off impulse – as depicted by a sea of red across the global equity markets – benefitted the Swiss franc's safe-haven status and capped the upside for the USD/CHF pair. Hence, it will be prudent to wait for some follow-through buying beyond the 0.9300 mark before positioning for any further appreciating move.

Market participants now look forward to the release of the Prelim University of Michigan US Consumer Sentiment Index. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/CHF pair.

Technical levels to watch