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  • USD/CHF was seen oscillating in a range through the early European session on Monday.
  • The risk-off mood benefitted the safe-haven CHF and capped the upside for the major.
  • A modest pickup in the USD demand helped limit any meaningful losses, at least for now.

The USD/CHF pair lacked any firm directional bias and remained confined in a narrow trading band, around mid-0.9200s through the early European session.

A combination of diverging forces failed to provide any meaningful impetus to the major, instead led to a subdued/rangebound price action on the first day of a new trading week. A slight deterioration in the global risk sentiment benefitted the safe-haven Swiss franc and capped the upside for the USD/CHF pair. That said, a goodish pickup in the US dollar demand extended some support and helped limit any meaningful downside for the major.

The USD found some support after Fed Chair Jerome Powell – during an interview with 60 Minutes – said that the US economy is set to make a turnaround and increased growth should provide more jobs. The comments added to the narrative of a relatively faster US economic recovery from the pandemic, bolstered by the impressive pace of coronavirus vaccinations and US President Joe Biden’s over $2 trillion infrastructure spending plan.

Powell further added that the Fed wants inflation moderately above 2% for some time but does not want it to go materially above 2%. Against the backdrop of Friday’s hotter-than-expected US Producer Price Index, which recorded the largest annual gains in 9-1/2 years in March, Powell’s remarks added to the speculations about an uptick in US inflation.

This, in turn, further raised doubts that the Fed will retain ultra-low interest rates for a longer period, which provided an additional boost to the greenback. However, the ongoing decline in the US Treasury bond yields held the USD bulls from placing aggressive bets and kept a lid on any meaningful gains for the USD/CHF pair, at least for now.

In the absence of any major market-moving economic releases from the US, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, traders might further take cues from the broader market risk sentiment in order to grab some short-term opportunities around the USD/CHF pair.

Technical levels to watch