USD/CHF pares biggest daily gains in fortnight near 0.9200 amid calmer markets

• USD/CHF grinds inside a choppy range of around 0.9200 after rising the most in 13 days the previous day.
• Market players await fresh clues to extend the previous risk-off sentiment.
• Off in Japan triggers USD pullback as bond markets remain inactive in Asia.
• Swiss ZEW numbers, risk catalysts will be the key drivers.

USD/CHF prints mild losses around 0.9207 heading into Wednesday’s European session.

The Swiss currency (CHF) pair dropped the most in two weeks the previous day as the US dollar cheered the broad risk-off mood. The latest losses by the quote, however, are more due to the lack of major catalysts and silent macros than the optimism in the markets.

That said, the US ruled out the scope of a summit between US President Joe Biden and his Russian counterpart Vladimir Putin on Tuesday while US Secretary of State Antony Blinken rejected the need for Thursday’s meeting with Russian Foreign Minister Sergei Lavrov earlier in Asia. Previously, market sentiment soured after Russia’s Putin recognized Donetsk and Luhansk in Eastern Ukraine as independent states and signed a decree "on friendship and cooperation". In a reaction to Moscow’s moves, the West announced multiple sanctions on Russia.

However, US President Biden’s comments like, “We have no intention of fighting Russia,” seem to have played the role of turning down the fears of a full-fledged war between the West and Moscow. Additionally, comments from Japan’s Prime Minister (PM) Fumio Kishida, calling on Russia to return to diplomatic means, also allow bears to take a breather.

To portray the shift in the market sentiment, S&P 500 Futures rise 0.55% intraday while taking rounds to 4,235. However, the US Treasury yields remain inactive at around 1.94%, due to off in Japan, after rising around 2.0% daily in the previous day.

Moving on, Switzerland’s monthly prints of ZEW Expectations for February, market consensus 4.6 versus 9.5 prior, will act as an immediate catalyst for the USD/CHF prices. Though, major attention will be given to headlines concerning Russia and Ukraine for clear directions. Additionally, a lighter calendar in the US keeps the market’s focus on the Fedspeak considering the recently easy comments from the policymakers.

Technical analysis

USD/CHF struggles to keep the bounce off a six-week-old support line, around 0.9165 by the press time. On the contrary, a monthly resistance line near 0.9245 guards the quote’s immediate upside.