USD/CHF climbs further beyond mid-0.9600s, hits one-month high ahead of US data

• USD/CHF gains traction for the seventh straight day and jumps to a one-month high.
• A recovery in the risk sentiment undermines the safe-haven CHF and offers support.
• Hawkish Fed expectations act as a tailwind for the USD and favour bullish traders.

The USD/CHF pair prolongs its bullish move for the seventh successive day on Tuesday and climbs to over a one-month high during the mid-European session. The pair is currently placed comfortably above the 0.9650 horizontal resistance and seems poised to appreciate further.

A modest recovery in the global risk sentiment - as depicted by a positive turnaround in the equity markets - seems to undermine the safe-haven Swiss franc. This, along with the underlying bullish tone surrounding the US dollar, favours bullish traders and supports prospects for an extension of the recent recovery from the 0.9370 area, or the monthly low.

Despite signs of easing US inflation, investors seem convinced that the Fed will stick to its policy tightening path and have been pricing in at least a 50 bps rate hike in September. The bets were reaffirmed by the recent hawkish comments by several Fed officials and the FOMC minutes, indicating that the US central bank would continue hiking rates to tame inflation.

That said, a downtick in the US Treasury bond yields seems to hold back the USD bulls from placing fresh bets, especially after the recent run-up to a two-decade high. This could keep a lid on any further gains for the USD/CHF pair. That said, a sustained break through the previous monthly high, around the 0.9650 area, suggests that the path of least resistance is to the upside.

Market participants now look forward to the US economic docket - featuring the flash PMI prints, New Home Sales data and Richmond Manufacturing Index. This, along with the US bond yields, might influence the USD price dynamics and provide some impetus to the USD/CHF pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities.

Technical levels to watch