USD/CHF struggles for a firm direction, stuck in a range above 0.9200 ahead of NFP
- USD/CHF was seen consolidating the previous day’s strong move up to a two-week high.
- A positive risk tone undermined the safe-haven CHF and continued lending some support.
- Softer US bond yields kept the USD on the defensive and capped the upside for the major.
- Investors also seemed reluctant and preferred to wait for the release of the US NFP report.
The USD/CHF pair lacked any firm directional bias and seesawed between tepid gains/minor losses, above the 0.9200 mark through the first half of the European session.
A combination of diverging forces failed to assist the USD/CHF pair to capitalize on the overnight strong gains to a two-week high and led to a subdued/range-bound price move on Friday. A softer tone surrounding the US Treasury bond yields kept the US dollar bulls on the defensive and capped the upside. That said, a generally positive risk tone undermined the safe-haven Swiss franc and extended some support.
Apart from this, the Fed's hawkish outlook acted as a tailwind for the greenback and helped limit any meaningful slide for the USD/CHF pair. It is worth recalling that the December 14-15 FOMC monetary policy meeting minutes released on Wednesday indicated that the US central bank could hike interest rates earlier than anticipated. Moreover, the money market is now pricing in a roughly 80% chance for an eventual liftoff in March 2022.
The fundamental backdrop supports prospects for an extension of this week's goodish rebound from the 0.9100 mark, or over a two-month low. Bulls, however, preferred to wait for a fresh catalyst from Friday's release of the closely-watched US monthly jobs data. The popularly known as NFP, due for release later during the early North American session, will play a key role in determining the next leg of a directional move for the USD/CHF pair.
Technical levels to watch