• A modest USD rebound already seems to have lost steam.
• Retracing US bond yields further contribute towards capping gains.
• Fading safe-haven demand helps limit deeper losses.
The USD/CHF pair struggled to build on the early uptick and seesawed between tepid gains/minor losses, just above the 0.9600 handle.
The US Dollar surrendered a major part of its early modest recovery gains, led by news of a deal to temporarily end the US government shutdown, and once again capped the pair near the 0.9635-40 supply zone.
Meanwhile, a sharp retracement in the US Treasury bond yields also did little to provide any additional boost to the greenback and assist the pair to build on last week's sharp recovery move from over 4-month lows.
However, the prevalent risk-on mood, as depicted by strong gains across European equity markets was seen dampening the Swiss Franc's safe-haven appeal and helped limit any further losses, at least for the time being.
Today's US economic docket lacks any major market-moving economic releases and hence, broader market risk sentiment, along with the US bond yield/USD price dynamics might continue to act as key determinants of the pair's momentum on Tuesday.
Technical levels to watch
Sustained weakness below the 0.9600 handle, leading to a subsequent break below the 0.9580-75 region, is likely to accelerate the fall towards 0.9540-35 support en-route the key 0.95 psychological mark.
On the upside, any meaningful up-move is likely to confront stiff resistance near the 0.9660-65 region, which if cleared could lift the pair back above the 0.9700 handle towards its next hurdle near the 0.9720 area.
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