USD/CHF trades with modest gains near mid-0.9300s, highest since September 30

• USD/CHF climbed to the highest level since late September during the early European session.
• The uptick seemed unaffected by a softer risk tone, which tends to benefit the safe-haven CHF.
• Retreating US bond yields kept the USD on the defensive, though did little to stall the move up.

The USD/CHF pair traded with a positive bias through the early European session and was last seen trading near the highest level since late September, just below mid-0.9300s.

Having defended the 0.9300 mark on Tuesday, the USD/CHF pair attracted fresh buying on Wednesday and now seems all set to build on a three-week-old upward trajectory. The uptick seemed unaffected by the prevalent cautious mood, amid concerns over the rising number of COVID-19 cases in Europe, which tends to underpin the safe-haven Swiss franc.

Bulls even shrugged off a subdued US dollar price action, led by retreating US Treasury bond yields. That said, acceptance that the Fed would be forced to hike interest rate sooner than later to contain stubbornly high inflation acted as a tailwind for the greenback. The bets were lifted further after Jerome Powell's renomination for the role of the Fed chair.

Meanwhile, the possibility for an eventual Fed rate hike move by July 2022 already seems to be priced in the markets. This might hold back the USD bulls from placing aggressive bets. However, the Fed funds futures indicate a high likelihood of another raise by November and support prospects for a further near-term appreciating move for the USD/CHF pair.

Market participants now look forward to the US economic docket, highlighting the releases of the Prelim (second estimate) US Q3 GDP, Durable Goods Orders and Core PCE Price Index later during the early North American session. This, along with the FOMC meeting minutes, will influence the USD price dynamics and provide a fresh impetus to the USD/CHF pair.

Technical levels to watch