USD/CHF reverses a modest intraday dip, lacks follow-through amid weaker USD

• The risk-on impulse undermined the safe-haven CHF and assisted USD/CHF to gain traction.
• The ongoing USD retracement slide from multi-month tops capped any meaningful upside.

The USD/CHF pair recovered around 35-40 pips from the early European session lows and refreshed daily tops, near the 0.9175-80 region in the last hour, albeit lacked follow-through.

The pair quickly reversed an intraday dip to the 0.9140 region and was supported by the risk-on impulse in the markets, which tends to undermine demand for the safe-haven Swiss franc. That said, the ongoing US dollar retracement slide from multi-month tops kept a lid on any meaningful upside for the USD/CHF pair.

Worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery forced investors to reassess the timing of the Fed's tapering. This, to a larger extent, offset a goodish pickup in the US Treasury bond yields and was seen as a key factor that acted as a headwind for the USD.

This, in turn, held investors from placing aggressive bullish bets around the USD/CHF pair and capped gains, at least for the time being. Investors also seemed reluctant ahead of the Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this week, further warranting some caution for bullish traders.

In the meantime, Monday's release of the flash US Manufacturing and Services PMI will be looked upon for some trading impetus. This, along with the US bond yields, might influence the USD price dynamics. Apart from this, the broader market risk sentiment might further produce some short-term opportunities around the USD/CHF pair.

Technical levels to watch