USD/CHF struggles for direction, stuck around 0.9200 ahead of Russia-Ukraine peace talks

• USD/CHF remained confined in a narrow trading band heading into the North American session.
• Signs of stability in the equity markets undermined the safe-haven CHF and extended support.
• Modest USD strength also contributed to limiting the downside, though geopolitics capped gains.

The USD/CHF pair oscillated in a narrow trading band heading into the North American session and was last seen hovering around the 0.9200 mark, nearly unchanged for the day.

The pair struggled to capitalize on its gains recorded over the past two trading sessions and witnessed subdued/range-bound price action on Thursday, though a combination of factors acted as a tailwind. Stable performance in the equity markets undermined the safe-haven Swiss franc and extended some support to the USD/CHF pair amid modest US dollar strength.

Ukraine's Presidential Adviser said that the delegation is headed for the second round of talks with Russia, which is set to start in a couple of hours. This, in turn, helped ease concerns about the recent escalation in geopolitical tensions, instead revived hopes of a ceasefire between Russia and Ukraine and led to modest recovery in the risk sentiment.

In the latest development, Russian President Vladimir Putin told his French counterpart Emmanual Macron on Thursday that the goals of Russia's operation in Ukraine will be achieved in any case. This comes on the back of reports that Russia has intensified the bombardment of Ukrainian cities, which should keep a lid on any optimistic move in the markets.

On the other hand, the USD drew support from the overnight hawkish comments by Fed Chair Jerome Powell, saying that the US central bank could take tougher action if inflation levels do not come down. Moreover, Chicago Fed President Charles Evans said that monetary policy is currently wrong-footed and needs to be upwardly adjusted toward neutrality.

The fundamental backdrop seems tilted in favour of bullish traders, though investors seemed reluctant and remain wary of the worsening situation in Ukraine. Hence, the incoming headlines surrounding the Russia-Ukraine saga would continue to play a key role in influencing the USD/CHF pair. Apart from this, traders will take cues from Fed Chair Jerome Powell's second day of testimony.

Technical levels to watch