USD/CHF Extends Recovery on Hawkish Fed Expectations and Rising Yields

The USD/CHF pair has extended its recovery above key moving averages, with the US Dollar regaining most of its previous day's losses. The Fed's hawkish expectations and rising US Treasury yields are keeping the Greenback underpinned near recent highs.

According to the CME FedWatch Tool, traders now see around a 65% probability of a rate hike at the September 15-16 meeting, following Chair Kevin Warsh's tough stance on inflation at the Jackson Hole Symposium. Warsh stated that the central bank would have more work to do if policymakers were not confident that inflation was returning to the 2% target.

Switzerland's subdued inflation is also supporting expectations of no change in policy rate by the Swiss National Bank. The country's August Consumer Price Index (CPI) data are due on Wednesday, with headline inflation expected to be flat on a monthly basis and annual rate rising to 0.5% from 0.4%.

On the daily chart, USD/CHF holds above key moving averages, retaining a constructive bullish tone. The Relative Strength Index (RSI) near 54 suggests moderate upside momentum, while the Moving Average Convergence Divergence (MACD) has turned slightly positive, hinting that buying pressure is gradually rebuilding.