USD/CHF stands tall near three-week high, just below 0.9800 mark amid stronger USD

• USD/CHF gained traction for the fourth straight day and climbed to a nearly three-week high.
• A pickup in the US bond yields helped revive the USD and remained supportive of the move.
• A softer risk tone underpinned the safe-haven CHF and kept a lid on any meaningful upside.

The USD/CHF pair built on its recent goodish rebound from the 0.9550 support zone and gained some follow-through traction for the fourth successive day on Wednesday. The momentum lifted spot prices to the 0.9800 neighbourhood, or a nearly three-week high during the first half of the European session.

A goodish pickup in the US Treasury bond yields helped revive the US dollar demand, which, in turn, was seen as a key factor that offered some support to the USD/CHF pair. In fact, the yield on the benchmark 10-year US government bond moved back above 3.0%, closer to a nearly four-week high touched earlier this week amid worries about persistent inflation.

Investors remain concerned that the global supply chain disruption caused by the Russia-Ukraine war would push consumer prices even higher. This might force the Fed to tighten its monetary policy at a faster pace, which acted as a tailwind for the US bond yields. That said, a weaker risk tone underpinned the safe-haven Swiss franc and capped gains for the USD/CHF pair.

The market sentiment remains fragile amid doubts that central banks can hike interest rates to curb inflation without impacting economic growth. Hence, the focus will remain on the US consumer inflation figures on Friday, which could determine the Fed's tightening path. This will drive the USD demand and provide a fresh directional impetus to the USD/CHF pair.

In the meantime, the US bond yields will play a key role in influencing the USD price dynamics in the absence of any top-tier economic releases from the US. Apart from this, the broader market risk sentiment would be looked upon for short-term trading opportunities around the USD/CHF pair.

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