USD/CHF sticks to intraday gains above mid-0.9300s amid positive risk tone

• USD/CHF gained some positive traction for the third successive day on Tuesday.
• A positive risk tone undermined the safe-haven CHF and remained supportive.
• Hawkish Fed expectations acted as a tailwind for the USD and favours bulls.

The USD/CHF pair edged higher through the early part of the European session and climbed to a fresh daily high, around the 0.9360 region in the last hour.

The pair attracted fresh buying on Tuesday - marking the third successive day of the positive move - and inched back closer to over a one-week high, around the 0.9380 area touched the previous day. Hopes for progress in the Russia-Ukraine peace negotiations and a diplomatic solution to end the war boosted investors' confidence. This was evident from a generally positive tone around the equity markets, which, in turn, undermined traditional safe-haven assets, including the Swiss franc, and extended support to the USD/CHF pair.

On the other hand, the US dollar continued drawing support from expectations that the Fed would adopt a more aggressive policy response to combat stubbornly high inflation. In fact, the markets have been pricing in the possibility of a 50 bps at the next two meetings, which was reinforced by the recent surge in the US Treasury bond yields. This was seen as another factor that acted as a tailwind for the USD/CHF pair and supports prospects for an extension of the recent goodish rebound from the 0.9260 zone, or the two-week low touched last Friday.

Market participants now look to the US economic docket, featuring the release of JOLTS Job Openings and the Conference Board's Consumer Confidence Index later during the early North American session. This, along with the US bond yields, will drive the USD demand. Traders will further take cues from developments surrounding the Russia-Ukraine saga, which will influence the risk sentiment and drive demand for the CHF. The combination of factors should provide some impetus to the USD/CHF pair and allow traders to grab some short-term opportunities.

Technical levels to watch