• USD/CHF lacked any firm directional bias and remained confined in a range on Wednesday.
  • The risk-on impulse in the markets undermined the safe-haven CHF and extended support.
  • The emergence of fresh USD selling acted as a headwind and capped the upside for the pair.

The USD/CHF pair seesawed between tepid gains/minor losses through the first half of the European session and was last seen trading in the neutral territory, just above the 0.9200 mark.

A combination of diverging forces failed to assist the USD/CHF pair to capitalize on the overnight solid rebound from the monthly low, around mid-0.9100s and led to subdued price action on Wednesday. A positive risk tone undermined the Swiss franc’s safe-haven status and extended some support. That said, the emergence of fresh US dollar selling acted as a headwind and capped the upside for the major, at least for the time being.

The nervousness over the worsening situation in Ukraine eased after a Kremlin spokesperson said on Tuesday that Russia is still open to diplomacy and has an interest in that. Apart from this, the fact that new economic sanctions on Russia were not as bad as feared further boosted investors’ confidence and triggered a fresh wave of the risk-on trade. This was evident from strong performance across the global equity markets.

The upside, however, remains capped amid modest USD weakness, which, so far, has failed to draw support from a fresh leg up in the US Treasury bond yields. Apart from this, the risk of an imminent Russian invasion of Ukraine held back bullish traders from placing aggressive bets around the USD/CHF pair. This, in turn, warrants caution before positioning for any further appreciating move amid absent relevant economic releases.

Technical levels to watch

This article was originally published by Fxstreet.com.Read the original article here.

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