• USD/CHF was seen consolidating the previous day’s strong move up to a two-week high.
• A positive risk tone undermined the safe-haven CHF and continued lending some support.
• Softer US bond yields have kept the USD on the defensive and capped upside for the major.
• Investors also seem reluctant to commit, preferring to wait for the release of the US NFP report.

The USD/CHF pair lacked any firm directional bias and seesawed between tepid gains/minor losses, above the 0.9200 mark through the first half of the European session.

A combination of diverging forces failed to assist the USD/CHF pair to capitalize on the overnight strong gains to a two-week high and led to a subdued/range-bound price move on Friday. A softer tone surrounding the US Treasury bond yields kept the US dollar bulls on the defensive and capped the upside. That said, a generally positive risk tone undermined the safe-haven Swiss franc and extended some support.

Overall the Fed's hawkish outlook is acting as a tailwind for the greenback and has helped limit any meaningful slide for the USD/CHF pair. It is worth recalling that the December 14-15 FOMC monetary policy meeting minutes released on Wednesday indicated that the US central bank could hike interest rates earlier than anticipated. Moreover, the money market is now pricing in a roughly 80% chance for an eventual lift-off in March 2022.

The fundamental backdrop supports prospects for an extension of this week's goodish rebound from the 0.9100 mark – a two-month low. Bulls, however, are are staying on the sidelines in anticipation of Friday's release of the market moving US monthly jobs data. The popularly known NFP release, due for later today during the early North American session, will play a key role in determining the next leg of a directional move for the USD/CHF pair.

Technical levels to watch