USD/CHF eases from two-week high, fails ahead of 0.9600 mark amid risk-off mood

• USD/CHF gains traction for the fifth straight day and climbs to a nearly two-week high.
• Hawkish Fed expectations, rising US bond yields boost the USD and remain supportive.
• The risk-off mood underpins the safe-haven CHF and cap gains, only for the time being.

The USD/CHF pair extends this week's positive move for the fifth successive day and climbs to a nearly two-week high during the first half of the European session. The intraday positive move, however, stalls just ahead of the 0.9600 mark amid the prevalent risk-off mood, which tends to benefit the safe-haven Swiss franc.

Growing worries about a global economic downturn continue to weigh on investors' sentiment, which is evident from a generally weaker tone around the equity markets. This, in turn, drives some haven flows towards the CHF and acts as a headwind for the USD/CHF pair. That said, haven flows also support the US dollar and sustained buying favours bullish traders.

In fact, the USD Index (DXY), which tracks the greenback's performance against a basket of currencies, climbs to its highest level since July 18 and remains well supported by hawkish Fed expectations. The markets seem convinced that the Fed will stick to its policy tightening cycle. The recent comments by several Fed officials and the incoming positive US macro data reaffirm market bets.

This, in turn, pushes the yield on the benchmark 10-year US government bond back closer to the 3.0% threshold and should continue to act as a tailwind for the greenback. The fundamental backdrop suggests that the path of least resistance for the USD/CHF pair is to the upside. Hence, any meaningful pullback could be seen as a buying opportunity and remain limited.

In the absence of any major market moving economic releases from the US, the US bond yields will drive the USD demand. Apart from this, the broader risk sentiment could produce some trading opportunities around the USD/CHF pair. Nevertheless, spot prices remain on track to register strong weekly gains and reverse a major part of last week's slide to a four-month low.

Technical levels to watch