• USD/CHF drifts lower for the second straight day and is pressured by a combination of factors.
• Fresh fears of the US banking crisis benefit the CHF and weigh on the pair amid a weaker USD.
• Investors now look to the US macro data for some impetus ahead of the crucial FOMC decision.

The USD/CHF pair extends the overnight downfall from the vicinity of the 0.9000 psychological mark, or a nearly two-week high and remains under heavy selling pressure for the second successive day on Wednesday. The downward trajectory remains uninterrupted through the first half of the European session and drags spot prices to a one-week low, around the 0.8875 region in the last hour.

Concerns that several other regional US lenders were facing solvency issues fuel worries about a full-blown banking crisis and boost demand for traditional safe-haven Swiss Franc (CHF). Apart from this, the ongoing US Dollar (USD) retracement slide from a three-week high touched on Tuesday further contributes to the offered tone surrounding the USD/CHF pair. The anti-risk flow, along with the uncertainty over the Federal Reserve's (Fed) rate hike path and worries about a US debt default, keep the US Treasury bond yields depressed and continue to weigh on the Greenback.

The US central bank is widely expected to deliver a 25 bps lift-off at the end of a two-day policy meeting this Wednesday. The US Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday, meanwhile, indicated that the ultra-tight US job market is loosening, which could put less pressure on inflation and allow the Fed to soften its hawkish stance. That said, the CPI in the US is still trending well above the central bank's target range and support prospects for further policy tightening. Hence, the focus will remain glued to the highly-anticipated FOMC decision.

Apart from this, the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting press conference will be scrutinized for clues about the policy outlook. This, in turn, will influence the near-term USD price dynamics and provide a fresh directional impetus to the USD/CHF pair. Heading into the key central bank event risk, traders on Wednesday will take cues from the US economic docket, highlighting the release of the ADP report on private-sector employment and the ISM Services PMI, for short-term opportunities.

Technical levels to watch