Ella 
USD/CHF opened weakly on Monday, but there was a lack of follow-through selling.
The U.S. dollar retreated slightly from its multi-month top, weighing on USD/CHF.
The Fed maintained its hawkish outlook and rising U.S. bond yields limited losses in the dollar and USD/CHF.
USD/CHF opened out of a bearish gap on Monday, but the Asian market finally maintained above the 0.8900 mark.
USD/CHF is currently trading around 0.8910-0.8915, down nearly 0.20% for the day, still reeling from US dollar fluctuations.
The U.S. dollar index, which tracks the greenback against a basket of currencies, retreated from six-month highs after a strong short-term rise, becoming a key factor weighing on USD/CHF. The dollar’s pullback may be due to a strong recovery in demand for the Japanese yen (JPY), which was supported by hawkish comments from Bank of Japan Governor Kazuo Ueda over the weekend. That said, expectations of a hawkish Fed policy may prevent traders from being aggressively bearish on the dollar.
Market participants appear to believe the Fed will keep interest rates higher for longer and have been pricing in the prospect of another quarter-point rate hike by the end of the year. This bet was reaffirmed by the Wall Street Journal, which reported that some officials are still inclined to test the waters for significant interest rate hikes on the grounds that they can cut rates later. This remains supportive of rising U.S. bond yields and should act as a “tailwind” for the U.S. dollar, so investors should proceed with caution before USD/CHF consolidates lower further. Investors may also be more inclined to stay on the sidelines ahead of this week’s key U.S. macro data, with the latest consumer inflation data due on Wednesday and producer price index (PPI) and retail sales data on Thursday. At the same time, the overall positive tone of the stock market may suppress the safe-haven function of the Swiss franc, thereby limiting the decline of USD/CHF. Therefore, it would be prudent to wait for strong follow-through selling in USD/CHF before confirming that USD/CHF has topped out around the 0.8940-0.8945 area.
