USD/CHF rebounds from multi-week lows, back above mid-0.9100s amid stronger USD

• USD/CHF gained some positive traction on Monday and snapped two days of the losing streak.
• Hawkish Fed expectations acted as a tailwind for the USD and provided a modest lift to the pair.
• COVID-19 jitters might underpin the safe-haven CHF and cap any meaningful gains for the major.

The USD/CHF pair built on its steady intraday bounce from over three-week lows and climbed to daily tops, around the 0.9160-65 region during the first half of the European session.

The pair attracted some buying on the first day of a new trading week and for now, seems to have stalled its recent sharp pullback from near three-month tops touched earlier this July. This marked the first day of a positive move in the previous three sessions and was sponsored by a goodish pickup in the US dollar demand.

Expectations that the Fed is moving closer to tighten its monetary policy stance sooner assisted the USD to regain some positive traction on Monday. It is worth recalling that the June FOMC meeting minutes released last Wednesday revealed that Fed officials agreed on the need to be ready to act if inflation or other risks materialize.

Hence, the market focus will remain on the latest US consumer inflation figures, due on Tuesday. Apart from this, Fed Chair Jerome Powell's semi-annual congressional testimony on Wednesday and Thursday will be looked upon for clues about the US central bank's policy outlook, which will influence the USD price dynamics in the near term.

Meanwhile, the supporting factor, to a larger extent, was offset by concerns about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus. This was evident from a generally weaker tone around the equity markets, which might underpin the safe-haven Swiss franc and cap gains for the USD/CHF pair.

Moreover, there isn't any major market-moving economic data due for release from the US. This, in turn, warrants some caution for bullish traders and makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the USD/CHF pair.

Technical levels to watch