USD/CHF starts consolidating gains before reaching parity, waits for US data
|- US Dollar Index extends gains, approaches 97.
- Retail sales and industrial production figures from the U.S. will be watched next.
- European equity indices record sharp losses.
After touching a fresh 5-day low at 0.9900, the USD/CHF made a sharp rebound in the second half of the day on Tuesday and preserved its bullish momentum on Wednesday. The pair continued to climb toward the parity level during the European trading hours and went into a consolidation phase ahead of the macroeconomic data releases from the United States. At the moment, the pair is up 0.3% on the day at 0.9970.
At the start of the NA session, NY Empire State Manufacturing and retail sales figures will be looked upon for fresh impetus. Markets expect retail sales to increase by 0.1% in July following June's 0.5% rise. Positive numbers are likely to help the DXY stretch higher. On the other hand, disappointing data could trigger an overdue correction. Later in the session, industrial production, unit labor costs, and nonfarm productivity releases will be watched closely as well. As of writing, the US Dollar Index is up 0.2% on the day at 96.85.
With European currencies recording heavy losses against the buck on Wednesday, major European equity indexes remain under pressure with Germany's DAX and the UK's FTSE 100 both losing over 1% on the day. If Wall Street opens in the red and struggles to recover, we could see the CHF find some demand as a safe-haven and show some resilience against the USD.
Technical outlook
Resistances for the pair could be seen at 1.0000 (parity level), 1.0065 (Jul. 13 high) and 1.1000 (psychological level). On the downside, supports align at 0.9900 (Aug. 14 low/psychological level), 0.9875 (Jul. 30 low) and 0.9825 (Jun. 14 low).
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