USD/CHF steadily climbs back above mid-0.9200s, fresh session tops

• A goodish pickup in the USD demand assisted USD/CHF to regain positive traction on Monday.
• Hawkish Fed expectations, a fresh leg up in the US bond yields acted as a tailwind for the USD.
• A softer risk tone might underpin the safe-haven CHF and cap any further gains for the major.

The USD/CHF pair built on its stead intraday ascent and climbed to fresh daily tops, around the 0.9260 region during the early European session.

The pair managed to regain some positive traction on the first day of a new trading week and inched back closer to Friday's swing high amid a goodish pickup in the US dollar demand. The prospects for an early policy tightening by the Fed pushed the yield on the benchmark 10-year US government bond back closer to the 1.60% threshold. This, in turn, was seen as a key factor that acted as a tailwind for the greenback.

The FOMC meeting minutes released last Wednesday reaffirmed that the Fed remains on track to begin rolling back its massive pandemic-era stimulus by the end of 2021. The markets also seem to have started pricing in the possibility of an interest rate hike in 2022 amid worries that the recent widespread rally in commodity prices will stoke inflation. This further contributed to the spike in the bond yields.

Meanwhile, fears about a faster than expected rise in inflation, along with signs of a global economic slowdown have been fueling concerns about the return of stagflation. Adding to this, Monday's disappointing Chinese macro data weighed on investors' sentiment. This was evident from a generally softer tone around the equity markets, which could benefit the safe-haven Swiss franc and cap gains for the USD/CHF pair.

Market participants now look forward to the release of US Industrial Production data for some impetus later during the early North American session. This, along with US bond yields, might influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for some meaningful opportunities around the USD/CHF pair.

Technical levels to watch