USD/CHF jumps back closer to multi-week top, above mid-0.9800s amid relentless USD buying

• USD/CHF caught fresh bids on Thursday and climbed back closer to a multi-week high.
• Aggressive Fed rate hike bets continued underpinning the USD and remained supportive.
• Investors now look forward to the US PPI and Jobless Claims for a fresh trading impetus.

The USD/CHF pair regained strong positive traction on Thursday and build on the previous day's late bounce from the weekly low, around the 0.9755 area. The momentum extended through the early European session and lifted spot prices above mid-0.9800s, back closer to a multi-week high touched on Tuesday.

The US dollar was back in demand and stood tall near a 20-year high amid the prospects for a more aggressive policy tightening by the Fed, which, in turn, provided a fresh lift to the USD/CHF pair. In fact, the red-hot US consumer inflation, which accelerated to the highest level since 1981, sealed the case for another supersized Fed rate hike move later this month.

Adding to this, Atlanta Fed President Raphael Bostic said that everything is in play to curb rising inflationary pressures. The markets were quick to react and started pricing in the possibility of a historic 100 bps rate hike at the upcoming FOMC meeting. This was seen as a key factor that continued underpinning the greenback and acted as a tailwind for the USD/CHF pair.

Meanwhile, the rapidly rising interest rates, along with the ongoing Russia-Ukraine war and fresh COVID-19 curbs in China, have been fueling fears about a possible recession. This further boosted the greenback's status as the global reserve currency and contributed to the USD/CHF pair's strong intraday gains, setting the stage for a further near-term appreciating move.

With the USD price dynamics turning out to be an exclusive driver, traders now look forward to the US economic docket - featuring the release of the Producer Price Index and Weekly Jobless Claims. The data might provide short-term impetus, though the fundamental backdrop seems tilted firmly in favour of bullish traders and supports prospects for additional gains.

Technical levels to watch