USD/CHF climbs to two-week high, above mid-0.9300s amid stronger USD/positive risk tone

• A combination of factors lifted USD/CHF to over a near two-week high on Friday.
• The Fed’s hawkish outlook and elevated US bond yields continued boosting the USD.
• A positive risk tone undermined the safe-haven CHF and remained supportive.

The USD/CHF pair maintained its bid tone through the early North American session and was last seen trading around mid-0.9300s, or a near two-week high.

Following the previous day's two-way/directionless price move, the USD/CHF pair attracted fresh buying on Friday and prolonged its recent strong rebound from sub-0.9200 levels. This marked the fifth day of a positive move in the previous six and was sponsored by a combination of factors. A goodish recovery in the equity markets undermined the safe-haven Swiss franc and acted as a tailwind for spot prices amid sustained US dollar buying, bolstered by the Fed's hawkish outlook.

In fact, the USD Index shot to the 100 psychological mark for the first time in nearly two years amid firming expectations that the Fed would tighten its monetary policy at a faster pace. The bets were reaffirmed by the March FOMC meeting minutes, which showed that many participants were prepared to raise interest rates by 50 bps in the coming months. This, along with worries over rising inflationary pressures, remained supportive of elevated US Treasury bond yields.

The latest leg up, summing up to a rally of over 150 pips from last week's swing low, comes on the back of bullish resilience below the very important 200-day SMA and supports prospects for further gains. Hence, a subsequent strength beyond the 0.9375 intermediate resistance, en-route the 0.9400 round-figure mark, remains a distinct possibility. The momentum could further get extended towards retesting the YTD high, around the 0.9460 region touched on March 16.

In the absence of any major market-moving economic releases from the US, the US bond yields will continue to play a key role in influencing the USD price dynamics. Apart from this, traders will take cues from fresh developments surrounding the Russia-Ukraine saga. The incoming geopolitical headlines should drive the broader market risk sentiment and demand for traditional safe-haven assets, including the CHF, which, in turn, should provide some impetus to the USD/CHF pair.

Technical levels to watch