USD/CHF pullback eyes 0.9200 as markets brace for Ukraine-Russia ceasefire

• USD/CHF pares the biggest daily rise in seven weeks.
• Market sentiment improves as Ukraine stops Russia from most directions, US readies NATO meeting.
• Moscow showed readiness to discuss terms for Kyiv’s surrender but Ukraine eyes ceasefire.
• US data, Fedspeak may also entertain traders but nothing more important than geopolitics.

USD/CHF portrays the general US dollar pullback while consolidating the previous day’s heavy gains ahead of Friday’s European session. That said, the quote drops 0.16% intraday to 0.9236 by the press time, following that heaviest rally last seen in early January.

Having witnessed the Russia-led market panic the previous day, traders expect a ceasefire between Kyiv and Moscow, which in turn weighs on the US dollar’s safe-haven demand and the USD/CHF pair as well.

Ukraine President Zelenskiy’s comments that Russian troops stopped from advancing in most directions seemed to have added to the recently upbeat mood. On the same line was the news that US President Joe Biden us up for a virtual meeting to discuss the security situation in and around Ukraine improved mood in the early Asian session. Before that, comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender,” added to the market’s cautious optimism even as Ukraine President Zelenskyy said they need to discuss a ceasefire with Russia.

While portraying the mood, S&P 500 Futures drop 0.60% and the US Treasury yields remain pressured around 1.95%, which in turn underpin the US Dollar Index (DXY) pullback from a 20-month high.

In addition to the geopolitical updates, the fears that geopolitics will push back Fed from faster rate-hikes may also have weighed on the DXY. However, the latest data from the US and Fedspeak have been upbeat, suggesting a faster trajectory towards monetary policy normalization. As a result, the Fed’s preferred inflation gauge, namely Core PCE Price Index, as well as Durable Goods Orders, for January will also be important for USD/CHF traders to watch for clear direction.

Technical analysis

Unless closing beyond a three-month-old descending trend line, around 0.9285 by the press time, USD/CHF sellers remain directed towards the 200-DMA level of 0.9182.