USD/CHF hits fresh three-week high, bulls await sustained move beyond 0.9800 mark

• USD/CHF gained traction for the sixth straight day and climbed to a fresh three-week high.
• Elevated US bond yields continued acting as a tailwind for the USD and remained supportive.
• A softer risk tone could benefit the safe-haven CHF and keep a lid on any meaningful upside.

The USD/CHF pair prolonged its recent strong move up witnessed over the past one week or so and edged higher for the sixth successive day on Thursday. Spot prices climbed to a fresh three-week high during the early European session, with bulls now awaiting sustained strength beyond the 0.9800 round-figure mark.

Elevated US Treasury bond yields continued acting as a tailwind for the US dollar, which, in turn, was seen as a key factor that offered some support to the USD/CHF pair. After a brief pullback earlier this week, the yield on the benchmark 10-year US government bond shot back above the 3.0% threshold amid worries about the persistent rise in inflationary pressures.

Investors remain concerned that the global supply chain disruption caused by the Russia-Ukraine war would push consumer prices even higher. The recent rally in crude oil prices further ramped up inflation fears and fueled speculations that the Fed would tighten its policy at a faster pace. This, in turn, underpinned the US bond yields and the USD.

Hence, the market focus remains glued to the latest US consumer inflation figures, due for release on Friday. The US CPI report would play a key role in determining the Fed's policy tightening path and influence the near-term USD price dynamics. This, in turn, should assist traders to determine the next leg of a directional move for the USD/CHF pair.

In the meantime, the prevalent caution mood could drive some haven flows towards the Swiss franc and keep a lid on any meaningful upside for the USD/CHF pair. Market participants now look forward to the release of the US Weekly Initial Jobless Claims data for short-term trading opportunities later during the early North American session.

Technical levels to watch