- USD/CHF caught aggressive bids on Monday and rallied to a one-week high.
- An escalation in the Russia-Ukraine war lifted the USD and acted as a tailwind.
- Verbal intervention by the SNB weighed on the CHF and remained supportive.
The USD/CHF pair maintained its strong bid tone through the early North American session and was last seen trading around mid-0.9200s. just a few pips below the one-week high touched earlier this Monday.
Having shown some resilience below the very important 200-day SMA, the USD/CHF pair caught aggressive bids on Monday and rallied nearly 100 pips from the intraday low, around the 0.9160 region. Concerns about the worsening situation in Ukraine continued boosting the US dollar's status as the global reserve currency and acted as a tailwind for the major.
In fact, the USD Index jumped to the highest level since May 2020 and was further underpinned by a sharp rise in the US Treasury bond yields. On the other hand, some verbal intervention by the Swiss National Bank, reiterating its pledge to intervene in the currency markets, weighed on the Swiss franc and provided an additional boost to the USD/CHF pair.
The risk sentiment stabilized after Russia announced that it will hold fire and open six humanitarian corridors to allow civilians to escape. Moreover, the announcement that the third round of Russia-Ukraine ceasefire talks is set to start at 14:00 GMT led to a goodish recovery in the equity markets and capped the upside for the buck, at least for now.
This, in turn, held back traders from placing aggressive bullish bets and kept a lid on any further gains for the USD/CHF pair. In the absence of any major market-moving economic releases from the US, the focus will remain on the incoming geopolitical headlines surrounding the Russia-Ukraine saga. This will influence the USD and provide some impetus to the USD/CHF pair.
Technical levels to watch