• USD/CHF extends gains for a second straight day as the US Dollar steadies.
• Softer US labor data temper Fed rate hike expectations, but officials maintain a hawkish tone.
• FOMC meeting minutes remain the key event for markets this week.

USD/CHF holds modest gains on Tuesday as traders balance softer US labor market data against hawkish Federal Reserve (Fed) expectations, keeping the US Dollar (USD) range-bound. At the time of writing, the pair is trading around 0.8066, remaining on the front foot for a second consecutive day.

Recent US labor market data have come in softer than expected, pointing to a gradual cooling after showing signs of improvement earlier this year. The four-week average of the ADP Employment Change eased to 21K from 24.25K. This follows last week's disappointing June Nonfarm Payrolls (NFP) report, which showed the US economy added just 57K jobs, well below market expectations of 110K.

The softer labor market data have prompted traders to scale back expectations of a near-term Fed rate hike. However, Fed officials continue to stress that inflation remains a concern.

New York Fed President John Williams said on Tuesday that the risks to the labor market are "pretty balanced," inflation is "still quite high," and monetary policy is "well positioned" to achieve the Fed's goals.

On Monday, Fed Governor Christopher Waller reaffirmed the central bank's commitment to its 2% inflation target, calling it "a credible pledge."

According to the CME FedWatch Tool, traders are pricing in a 75% probability that the US central bank will leave borrowing costs unchanged at this month's meeting. Meanwhile, the odds of a September rate hike stand at 58%, down from 68% a week ago.

Attention now turns to the release of the Federal Open Market Committee (FOMC) meeting minutes on Wednesday, which could shed light on the Fed's next policy move.

Meanwhile, geopolitical risks resurfaced after Iran's Islamic Revolutionary Guard Corps (IRGC) reportedly attacked a commercial vessel near the Strait of Hormuz on Monday, limiting the US Dollar's downside.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 100.95.

Iranian Foreign Minister Abbas Araghchi said on Tuesday that negotiations on a final agreement would not begin while threats persist, after US President Donald Trump warned that Washington would either reach a deal with Tehran or "finish the job."