USD/CHF retreats further from 5-month highs

• Pair correcting from 5-month highs.
• DXY lost strength on a report about Trump tax plan.
• US bonds continue to recover.

The USD/CHF pair broke a relevant short-term support during the American session amid a slide of the US dollar and printed a fresh daily low at 0.9938. 

Correction gains momentum 

The pair reached on Friday the highest level since May at 1.0036 before starting to correct to the downside. Today it moved during most of the day in a range between 1.0000 and 0.9965. Recently it broke to the downside and fell to 0.9938, the lowest since Thursday. Then it bounced modestly to the upside. At the time of writing was trading at 0.9950/55, modestly lower. 

The latest slide took place amid a retreat of the greenback across the board after a report from Bloomberg mentioned that the US House of Representatives was discussing implementing Trump’s tax cuts in a gradual manner in a five year period. Equity prices dropped in Wall Street and US yields fell further. The US Dollar Index printed a fresh daily low at 94.38. 

New developments related to the Russian-gate were another negative factor for Wall Street. Paul Manafort, a former campaign adviser of Donald Trump, pleaded guilty to making a false statement to the FBI.

Outlook and levels

The pair appears to be poised to extend the correction in the short-term with momentum indicators favoring the downside while a recovery above the parity level would strengthen the greenback. 

To the upside, resistance levels might be located at 0.9995/1.0000 (daily high), 1.0035/40 (weekly high) and 1.0060. On the flip side, supports might lie at 0.9935 (Oct 25 high), 0.9900 and 0.9880 (Oct 23 high).