USD/CHF drops towards 0.96 as DXY retraces daily gains

The USD/CHF pair came under a renewed selling pressure in the first half of the NA session and erased its daily earnings to turn negative near the 0.96 handle. As of writing, the pair was trading at 0.9620, losing 0.17% on the day.

The pair's downfall seems to be triggered by a broad-based USD sell-off that was triggered after the disappointing macro data from the U.S. The Fed's favorite measure of inflation, the core personal consumption expenditures (PCE) price index, dropped to its lowest level since December 2015 as it came in at 1.4% on a yearly basis, hurting the expectations of the Fed making another rate hike before the end of the year. Although other data revealed that personal income increased by 0.4% on a monthly basis in July, the greenback erased its daily gains with the US Dollar Index dropping below the 93 mark. At the moment, the index was at 92.85, virtually flat on the day.

On the other hand, major equity indexes started the day on a positive note with the Dow Jones Industrial Average and the S&P 500 indexes gaining 0.1% and 0.4% respectively, suggesting that the market sentiment is positive in the session. A high risk appetite could provide support for the pair as the safe-haven CHF could struggle to gather strength.

Technical outlook

The pair could face the initial hurdle at 0.9630 (20-DMA/50-DMA) ahead of  0.9685 (100-DMA) and 0.9765 (Aug.16 high). On the flip side, supports could be encountered at 0.9585 (Aug. 18 low), 0.9500 (psychological level) and 0.9440 (Jul. 21 low). Despite today's price action, the RSI indicator on the daily graph remains near the 50 handle, suggesting that the pair is having a difficult time setting a near-term direction.

Today's data from the U.S.

• US: Personal income increased $65.6 billion (0.4%) in July
• US: Weekly initial claims was 236,000, an increase of 1,000 from previous week
• US-based employers announced plans to cut payrolls by 33,825 in August
• US: Pending home sales lessen 0.8% in July
• US: August Chicago Business Barometer stayed unchanged at 58.9