USD/CHF struggles near 0.9100 mark, stronger USD lends support ahead of US CPI

• USD/CHF remains depressed near its lowest level since early February touched on Monday.
• Rebounding US bond yields revives the USD demand and limits the downside for the major.
• Traders also seem reluctant and prefer to wait for the release of the crucial US CPI report.

The USD/CHF pair attracts fresh selling following an early uptick to the 0.9145 region on Tuesday and remains on the defensive through the mid-European session on Tuesday. The pair is currently placed around the 0.9100 mark, down over 0.10% for the day and well within the striking distance of its lowest level since early February touched on Monday.

The downside for the USD/CHF pair, however, seems cushioned, at least for the time being, amid resurgent US Dollar (USD) demand, bolstered by a goodish pickup in the US Treasury bond yields. The uptick in the US bond yields comes in the wake of easing fears of a broader systemic crisis, especially after the US authorities moved to limit the fallout from the sudden collapse of Silicon Valley Bank (SVB). Apart from this, a recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - undermines the safe-haven Swiss Franc (CHF) and turns out to be another factor lending some support to the major.

Traders also seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the latest US consumer inflation figures, due later during the early North American session. The crucial US CPI data will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the USD/CHF pair ahead of a two-day FOMC policy meeting, starting next Tuesday. In the meantime, expectations that the Fed will slow, if not halt, its interest rate-hiking cycle in the wake of the strain on the US banking system could keep a lid on the US bond yields and hold back the USD bulls from placing aggressive bets.

The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/CHF pair is to the downside. Bearish traders, however, are likely to wait for acceptance below the 0.9100 mark before placing fresh bets and positioning for an extension of the recent sharp pullback from the 0.9435-0.9440 supply zone, or the YTD peak touched last week.

Technical levels to watch