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The USD/CHF pair holds positive ground near 0.7780 during the early European session on Thursday, bolstered by renewed US Dollar (USD) demand. Analysts expect the Greenback’s recovery will be short-lived as traders remain concerned about the Federal Reserve’s (Fed) independence.

The USD rebounds after US President Donald Trump nominated former Fed governor Kevin Warsh as Fed chair last week. Traders anticipate a slower pace of interest rate cuts under his tenure and a focus on shrinking the Fed's balance sheet.

However, doubts over the US central bank's independence resurfaced following recent Trump comments. The US president said on Thursday that he would have passed on Kevin Warsh as his nominee to lead the US central bank if Warsh had expressed a desire to hike interest rates.

"For most of the year, including the next few weeks, the dollar is likely to be choppy," said Jane Foley, head of FX research at Rabobank. "We still don't think the market has fully put to bed concerns about Fed independence and credibility."

Traders will closely monitor the developments surrounding the US-Iran negotiations later this week. Iranian and US officials confirmed on Wednesday that talks between their countries would be held in Oman on Friday. Any positive signs from a meeting could undermine the safe-haven currencies, such as the Swiss Franc (CHF) and create a tailwind for the pair in the near term.

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