Client Certificate Requested – Fiddler failed to intercept and decrypt app traffic

While trying to inspect internet traffic a 3rd party windows application is sending to the server, I ran into a problem that the app could not communicate with the server, indicating perhaps a certificate pinning protection.

Fiddler showed me the following popup:
enter image description here

Is this caused by certificate pinning and what is the best practice to bypass it? What exactly is Fiddler asking me here to do?