USD/CHF surrenders intraday gains to multi-week highs, flat-lined around 0.9300

• USD/CHF struggled to preserve its intraday gains to a multi-week high level of 0.9330.
• The USD pullback from a 16-month peak prompted some profit-taking around the pair.
• The cautious market mood benefitted the safe-haven CHF and contributed to the slide.

The USD/CHF pair surrendered a major part of its intraday gains to a seven-week peak and was last seen hovering near the lower end of the daily trading range, around the 0.9300 mark.

The pair built on the hotter-than-expected US CPI-inspired rally from the 0.9100 mark and continued scaling higher through the first half of the trading action on Wednesday. This marked the sixth successive day of a positive move and pushed the USD/CHF pair to the highest level since early October.

The momentum, however, ran out of steam near the 0.9330 region amid a modest US dollar pullback from a 16-month high. The USD downtick lacked any obvious catalyst and could be solely attributed to some profit-taking, which is likely to be limited amid the prospects for an early policy tightening by the Fed.

The markets have been pricing in the possibility of a Fed rate hike move by July 2022 amid worries about rising inflation. The Fed funds futures indicate a high likelihood of another raise by November. This was reinforced by elevated US Treasury bond yields, which should act as a tailwind for the greenback.

Meanwhile, concerns about surging consumer prices dampened investors' appetite for perceived riskier assets. This was evident from the prevalent cautious mood around the equity markets. This, in turn, benefitted the Swiss franc's safe-haven appeal and further contributed to the USD/CHF pair's intraday downfall.

That said, it will still be prudent to wait for a strong follow-through selling before confirming that the USD/CHF pair has topped out and positioning for any meaningful corrective slide. Investors now look forward to the US housing market data – Building Permits and Housing Starts – for a fresh impetus.

This, along with speeches by influential FOMC members and the US bond yields, will drive the USD demand. Apart from this, the broader market risk sentiment would also play a key role in producing some meaningful trading opportunities around the USD/CHF pair.

Technical levels to watch