USD/CHF consolidates its recent losses to over two-week low, holds above mid-0.9200s

• USD/CHF drifted lower for the fourth successive day amid a broad-based USD weakness.
• The risk-on impulse undermined the safe-haven CHF and helped limit losses for the pair.
• The Fed’s hawkish outlook supports prospects for the emergence of some USD buying.

The USD/CHF pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range just a few pips above the two-week low, around the 0.9270 area.

The pair prolonged its recent sharp retracement slide from the 0.9460 area or the highest level since April 2021 and continued losing ground on the last day of the week. This marked the fourth successive day of the negative move - also the seventh in the previous eight - and was sponsored by modest US dollar weakness.

That said, a generally positive tone around the equity markets undermined the safe-haven Swiss franc and extended some support to the USD/CHF pair. Apart from this, rising bets for a 50 bps Fed rate hike at the May policy meeting acted as a tailwind for the buck and helped limit further losses for the pair, at least for now.

It is worth mentioning that a slew of influential FOMC members, including Fed Chair Jerome Powell, left the door open for a larger rise in borrowing costs to contain unacceptably high inflation. The speculations were further fueled by surging oil prices, which could continue to put upward pressure on already elevated consumer prices.

This, in turn, assisted the yield on the benchmark 10-year US government bond to hold steady near the  22-month high touched earlier this week, which should act as a tailwind for the greenback. That said, the USD/CHF pair's inability to attract any buyers warrants some caution before positioning for any meaningful appreciating move.

Market participants now look forward to the US economic docket, featuring the release of revised Michigan Consumer Sentiment Index and Pending Home Sales data. The focus, however, will remain on geopolitical developments. Apart from this, the US bond yields will influence the USD and provide some impetus to the USD/CHF pair.

Technical levels to watch