USD/CHF clings to gains near 0.9170-75 area amid notable USD strength

• A goodish pickup in the USD demand assisted USD/CHF to gain some traction on Tuesday.
• The risk-off impulse benefitted the safe-haven CHF and kept a lid on any meaningful gains.

The USD/CHF pair maintained its bid tone through the first half of the European session and was last seen trading near daily tops, around the 0.9170-75 region.

Following the previous day's rejection slide from the 0.9200 mark, the USD/CHF pair caught some fresh bids on Tuesday and was supported by resurgent US dollar demand. Concerns about the potential economic fallout from the fast-spreading Delta variant of the coronavirus benefitted the greenback's status as the global reserve currency.

That said, a sharp intraday fall in the US Treasury bond yields acted as a tailwind for the greenback and held bulls from placing aggressive bets. Apart from this, the risk-off impulse in the markets benefitted the safe-haven Swiss franc and further collaborated towards capping any meaningful upside for the USD/CHF pair, at least for now.

Traders also seemed reluctant and preferred to wait on the sidelines ahead of a two-day FOMC meeting, starting this Tuesday. Market players will look for a clear answer to the crucial question of when the tapering will start. This will influence the near-term USD price dynamics and provide a fresh directional impetus to the USD/CHF pair.

In the meantime, traders might take cues from the US economic docket – highlighting the releases of Durable Goods Orders and the Conference Board's Consumer Confidence Index. This, along with the broader market risk sentiment, will be looked upon for short-term trading opportunities.

Technical levels to watch