- The risk-on mood undermined the safe-haven CHF and assisted USD/CHF to regain positive traction.
- Diminishing odds for an early Fed rate hike kept the USD bulls on the defensive and might cap gains.
The USD/CHF pair climbed to fresh daily tops, around the 0.9145-50 region during the early European session, recovering over 50 pips from over three-week lows touched earlier this Monday.
The pair stalled Friday's rejection slide from the 0.9200 round figure and attracted some dip-buying near the 0.9100 mark on the first day of a new trading week. The prevalent bullish sentiment in the financial markets undermined traditional safe-haven currencies, including the Swiss franc, and provided a goodish lift to the USD/CHF pair.
That said, a subdued US dollar demand failed to impress bullish traders and might keep a lid on any further gains for the USD/CHF pair, at least for the time being. During the highly anticipated speech at the Jackson Hole Symposium, Fed Chair Jerome Powell downplayed market speculations for an earlier than anticipated rate hike move.
Powell sounded more upbeat about the progress on the employment and inflation front and reaffirmed that QE tapering would begin later this year. Powell, however, warned of the downside risks posed by the rapid spread of the delta variant. He also attempted to de-link tapering from the rate lift-off and reassured that the Fed was in no hurry to raise rates.
The repricing of the Fed lift-off was evident from the ongoing decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond fell back closer to the 1.30% threshold. This, in turn, was seen as a key factor that continued to weigh on the greenback and should cap the upside for the USD/CHF pair.
Market participants now look forward to the release of Pending Home Sales data from the US for some impetus later during the early North American session. Apart from this, the US bond yields will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the USD/CHF pair.
Technical levels to watch
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