USD/CHF sticks to strong gains, comfortably above 0.9200 amid Russia-Ukraine crisis

• USD/CHF caught aggressive bids on Thursday and jumped to over a one-week high amid stronger USD.
• Russia’s invasion of Ukraine benefitted the USD’s status as the reserve currency and extended support.
• Sustained strength beyond the 0.9220 resistance zone might have set the stage for additional gains.

The USD/CHF pair built on its intraday bullish momentum and jumped to over a one-week high, closer to mid-0.9200s during the mid-European session.

The fast-paced developments that began after Russian President Vladimir Putin announced a military operation in Ukraine boosted the US dollar's status as the global reserve currency. This, in turn, assisted the USD/CHF pair to attract fresh buying on Thursday and rally nearly 80 pips from the vicinity of the very important 200-day SMA, around the 0.9175 region.

Reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. As many as 40 Ukrainian soldiers and 10 civilians were killed by Russian shelling. Ukraine added that troops continue to pour across its borders into the eastern regions and landing by sea at the cities of Odesa and Mariupol in the south.

US President Joe Biden condemned Russia and called the attack unprovoked and unjustified. He further promised that the US and its allies will respond in a united and decisive way, and impose severe sanctions on Russia. This further fueled worries about a major conflict between Russia and the West, which forced investors to continue dumping perceived riskier assets.

The worsening situation in Ukraine forced investors to scale back their expectations for a more aggressive policy response by the Fed to combat stubbornly high inflation. This, along with the global flight to safety, triggered a steep decline in the US Treasury bond yields. This could act as a headwind for the greenback and cap gains for the USD/CHF pair.

That said, sustained strength and acceptance beyond the 0.9215-0.9220 horizontal resistance could be seen as a fresh trigger for bullish traders and might have already set the stage for additional gains. This, in turn, suggests that the path of least resistance for the USD/CHF pair is to the upside and any meaningful pullback could be seen as a buying opportunity.

Market participants now look forward to the US economic docket, highlighting the release of the Prelim GDP report and the usual Weekly Initial Jobless Claims. The data, however, might do little to influence the USD price dynamics or provide any meaningful impetus to the USD/CHF pair as the focus remains on developments surrounding the Russia-Ukraine saga.

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