• USD/CHF extends its losses as traders expect the Fed to start reducing the rate in September.
• San Francisco Fed President Mary Daly emphasized that the US central bank should reduce rates gradually.
• The Swiss Franc may appreciate further due to rising geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict.

USD/CHF continues to lose ground, trading around 0.8640 during the Asian session on Monday. The US Dollar (USD) continues to weaken following dovish comments from Federal Reserve (Fed) officials, raising bets for an interest rate cut by the central bank in September and undermining the USD/CHF pair.

Federal Reserve Bank of San Francisco President Mary Daly emphasized Sunday that the US central bank should take a gradual approach to reducing borrowing costs, according to the Financial Times. Additionally, Federal Reserve Bank of Chicago President Austan Goolsbee warned that central bank officials should be cautious about keeping a restrictive policy in place longer than necessary.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against other six major currencies, extends its losses for the second successive day, hovering around 102.10. The decline in the US yields contributes to downward pressure for the Greenback with 2-year and 10-year yields standing at 4.05% and 3.88%, respectively, at the time of writing.