USD/CHF flat-lined below mid-0.9200s, bulls await US CPI on Thursday for fresh impetus

• USD/CHF witnessed two-way price moves on Tuesday before stabilizing in the neutral territory.
• Elevated US bond yields acted as a tailwind for the USD and helped limit any meaningful slide.
• Signs of stability in the equity markets undermined the safe-haven CHF and extended support.

The USD/CHF pair seesawed between tepid gains/minor losses through the early North American session and was last seen trading in the neutral territory, just below mid-0.9200s.

Having climbed to a one-week high, the USD/CHF pair witnessed some intraday selling and touched a daily low, around the 0.9225 area during the latter part of the European session. However, a combination of factors acted as a tailwind and helped limit the downside. Signs of stability in the equity markets undermined the safe-haven Swiss franc and extended some support amid modest US dollar strength.

The greenback drew some support from a fresh leg up in the US Treasury bond yields, bolstered by the prospects for a faster policy tightening by the Fed. In fact, the markets have been pricing in the possibility of a 50 bps rate hike at the March FOMC meeting. This, in turn, pushed the yield on the benchmark 10-year US government bond back closer to the 2% threshold and benefitted the greenback.

That said, the USD/CHF pair, so far, has struggled to gain any meaningful traction as investors seemed reluctant to place aggressive bets ahead of Thursday's release of the US consumer inflation figures. The latest US CPI report could play a key role in determining the Fed's near-term policy outlook, which, in turn, will drive the USD demand and provide a fresh directional impetus to the USD/CHF pair.

In the meantime, the US bond yields will continue to influence the USD price dynamics and provide some impetus to the USD/CHF pair. Apart from this, traders will take cues from the broader market risk sentiment to grab some short-term opportunities amid absent relevant market moving economic releases from the US.

Technical levels to watch