USD/CHF eases from daily high, trades with modest gains around 0.9330 area

• USD/CHF attracted fresh buying on Thursday, albeit the uptick lacked bullish conviction.
• The Fed’s hawkish outlook underpinned the USD and remained supportive of the move.
• Stability in equity markets, SNB’s decision to maintain the status quo weighed on the CHF.
• The lack of follow-through buying warrants cautions before positioning for further gains.

The USD/CHF pair held on to its modest intraday gains through the first half of the European session and was last seen trading a few pips below the daily high, around the 0.9325-0.9330 region.

The pair once again showed some resilience below the 0.9300 round-figure mark and attracted some dip-buying on Thursday amid a broad-based US dollar strength. The recent remarks by a slew of influential FOMC members, including Fed Chair Jerome Powell, boosted market bets for a 50 bps rate hike move at the upcoming policy meeting in May. This was reinforced by elevated US Treasury bond yields, which, in turn, continued acting as a tailwind for the greenback.

Conversely, the Swiss National Bank (SNB) left its ultra-expansive monetary policy unchanged at the end of March policy meeting on Thursday and kept policy rates locked down at -0.75%. Adding to this, the SNB reiterated its commitment to conduct currency interventions to stem the rise of the domestic currency. This, along with signs of stability in the equity markets, undermined the safe-haven Swiss franc and extended additional support to the USD/CHF pair.

The uptick, however, lacked any follow-through buying, which might hold back bullish traders from placing aggressive bets around the USD/CHF pair. That said, repeated failures to find acceptance below the 0.9300 round-figure mark suggests that the recent pullback from the 0.9460 area or the highest level since April 2021 has run its course. Sustained strength beyond the 0.9355-0.9360 zone will reaffirm the outlook and set the stage for some meaningful gains.

Investors, however, seemed reluctant and preferred to wait for fresh developments surrounding the Russia-Ukraine saga. US President Joe Biden will meet NATO and European leaders in an emergency summit on the Ukraine War. The incoming headlines will influence the risk sentiment and drive the USD demand, which, in turn, should provide some impetus to the USD/CHF pair.

Technical levels to watch