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  • USD/CHF gained positive traction on Monday and recovered further from multi-year lows.
  • The recent strong rally in the US bond yields underpinned the USD and remained supportive.
  • COVID-19 jitters weighed on investors sentiment and might cap any further gains for the pair.

The USD/CHF pair climbed to near two-week tops during the early European session, with bulls now looking to extend the momentum beyond the 0.8900 mark.

The pair caught some fresh bids on the first day of a new trading week and built on last week’s goodish rebound from the vicinity of mid-0.8700s, or multi-year lows. The uptick was exclusively sponsored by some follow-through US dollar buying, supported by the recent strong rally in the US Treasury bond yields.

In fact, the yield on the benchmark 10-year US government bond extended last week’s breakout momentum beyond the 1.0% mark and shot to the highest level since March amid hopes for additional US fiscal stimulus. This, in turn, forced investors to further unwind their bearish USD bets and drove the USD/CHF pair higher.

Meanwhile, a slight deterioration in the global risk sentiment might undermine demand for the safe-haven Swiss franc and keep a lid on any runaway rally for the USD/CHF pair. Investors turned cautious amid worries about the continuous surge in coronavirus cases and the discovery of new variants of the highly contagious disease.

In the absence of any major market-moving economic releases from the US, the pair remains at the mercy of the USD price dynamics and the market risk sentiment. This makes it prudent to wait for some strong follow-through buying before confirming that the USD/CHF pair has bottomed out and positioning for any meaningful recovery.

Technical levels to watch