USD/CHF prints three-day run-up around mid-0.9000s amid broad USD strength

• USD/CHF edges higher around weekly top, extends Monday’s recovery from 11-week bottom.
• Risk-off mood backs the US dollar, geopolitics, pre-data caution weigh on sentiment.
• US CPI, Gaza updates become the key amid a busy day.

USD/CHF bulls catch a breather around weekly top, up 0.20% intraday near 0.9055 while heading into Wednesday’s European session open. The Swiss currency pair benefits from the inflation anxiety and geopolitical fears of late.

Escalating fears of the Fed’s tapering ahead of the US Consumer Price Index (CPI) could be cited as the major concern for the pessimists. Also negative for the sentiment are the headlines from Gaza that suggest over 35 deaths amid the historical Israel-Palestine conflict.

Additionally, mixed chatters concerning the covid vaccinations and virus woes in Asia, coupled with the Fed’s failures to convince markets of no monetary policy alteration, offer extra strength to the risk-off mood.

Against this backdrop, S&P 500 Futures drop over half a percent while the US dollar index (DXY) jumps to the weekly high, up 0.20% to 90.35 by the press time.

The US dollar is likely to keep the head high before the CPI data but any positive surprises, which are less expected, may trigger market optimism and disappoint the USD/CHF bulls afterward. It should, however, be noted that the rest of the risk catalysts, like covid, vaccine and geopolitics, will also be important for near-term trade direction.

Read: US Consumer Price Index April Preview: The two base effects of inflation

Technical analysis

Unless crossing a confluence of 100-day and 200-day SMA near 0.9080-85, USD/CHF buyers are less likely to be convinced.