USD/CHF climbs to over two-week tops, further beyond 0.9200 mark

• USD/CHF gained strong follow-through traction for the second successive day.
• Hawkish Fed expectations underpinned the greenback and remained supportive.
• The stage now seems set for a move towards reclaiming the 0.9300 round figure.

The USD/CHF pair built on its steady intraday ascent and climbed back above the 0.9200 mark, or over two-week tops heading into the North American session.

The pair built on the previous day's bullish breakout momentum through a one-week-old trading range and gained strong follow-through traction for the second successive day on Thursday. The momentum was sponsored by sustained buying interest surrounding the US dollar, which shot to the highest level since July 2020 amid prospects for an early policy tightening by the Fed.

The US CPI report released on Wednesday showed that consumer prices in October rose at the fastest annual pace since 1990. This, in turn, encouraged bets that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. In fact, the Fed funds futures market indicate that the first-rate hike could come as soon as July 2022.

Meanwhile, the repricing of the likely timing over the Fed's next policy move triggered a massive rally in the US Treasury bond yields. This was seen as another factor that continued acting as a tailwind for the greenback and pushed the USD/CHF pair higher. The momentum took along some trading stops near the 0.9200 mark and might have set the stage for additional gains.

That said, relatively thin liquidity conditions, on the back of a bank holiday in the US and Canada, warrant some caution for aggressive bullish traders. Nevertheless, the fundamental backdrop supports prospects for a further near-term appreciating move towards testing the next relevant hurdle near the 0.9235-40 region. Bulls might eventually aim to reclaim the 0.9300 mark.

Technical levels to watch