USD/CHF struggles near multi-week low, just above mid-0.9200s amid weaker USD/geopolitics

• USD/CHF drifted lower for the second successive day amid heavy USD selling bias.
• The US macro data failed to impress the USD bulls or lend any support to the pair.
• The Ukraine crisis benefitted the safe-haven CHF and also contributed to the slide.

The USD/CHF pair maintained its offered tone through the early North American session and was last seen hovering near the 0.9260 region, or over a three-week low.

The pair extended the overnight sharp retracement slide from the 0.9375-0.7380 area and witnessed heavy selling for the second successive day on Wednesday amid a broad-based US dollar weakness. Hopes for a diplomatic solution to end the war in Ukraine continued lending some support to the shared currency. This, along with a softer tone around the US Treasury bond yields, dragged the USD to over a one-week low and exerted some downward pressure on the USD/CHF pair.

The USD remained depressed and failed to gain any respite from the US ADP report, which showed that private-sector employers added 455K jobs in March as against the 450K anticipated. Adding to this, the previous month's reading was also revised higher to 486K from the 475K reported earlier. This, however, was overshadowed by the downward revision of the US Q4 GDP print, showing that the economic growth stood at 7.1% as compared to 7.2% estimated previously.

Meanwhile, the incoming geopolitical headlines raised scepticism about any progress in the Russia-Ukraine peace talks. In fact, a Kremlin spokesperson said that they have not noticed anything that looks like a breakthrough in negotiations. Moreover, an adviser to Ukraine’s President noted that Russia transferring forces from Kyiv to encircle troops in the east. This, in turn, tempered investors' appetite for riskier assets and benefitted the safe-haven Swiss franc.

On the other hand, sustained USD weakness suggests that the markets have fully priced in the prospects for a faster policy tightening cycle by the Fed. Hence, it would now be interesting to see if the USD/CHF pair is able to attract any buying at lower levels or prolongs its recent pullback from the YTD top, around the 0.9460 area touched earlier this month. Nevertheless, the market focus will remain on fresh developments surrounding the Russia-Ukraine saga.

Technical levels to watch