USD/CHF climbs to over three-week tops, around 0.9230 region

• USD/CHF gained strong follow-through traction for the third successive day on Friday.
• Hawkish Fed expectations continued underpinning the USD and remained supportive.
• The cautious market mood could benefit the safe-haven CHF and cap any further gains.

The USD/CHF pair continued scaling higher through the mid-European session and shot to over three-week tops, around the 0.9230 region in the last hour.

The pair built on this week's hotter-than-expected US CPI-inspired strong positive move from the 0.9100 mark and gained some follow-through traction for the third successive day on Friday. The momentum was sponsored by the prevalent bullish sentiment surrounding the US dollar, which remained well supported by prospects for an early policy tightening by the Fed.

The US consumer prices in October rose at the fastest pace since 1990 and fueled speculations that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. In fact, the Fed funds futures indicate that the first-rate hike could come as soon as July 2022. This, in turn, was seen as a key factor that acted as a tailwind for the USD.

The greenback was further underpinned by elevated US Treasury bond yields, though the cautious market mood could benefit the safe-haven Swiss franc and cap gains for the USD/CHF pair. Nevertheless, the ongoing positive move suggests that the recent sharp corrective slide from September monthly swing lows has run its course and supports prospects for additional near-term gains.

Investors now look forward to the US economic docket, highlighting the release of the Prelim Michigan Consumer Sentiment Index later during the early North Amerian session. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/CHF pair.

Technical levels to watch