USD/CHF recovers from 2-week lows, back above 0.96 mark ahead of US CPI

The USD/CHF pair has managed to recover from early the early European session dip to sub-0.9600 level and is currently holding in neutral territory ahead of the US inflation figures. 

The pair extended its sharp retracement from over 2-month highs touched earlier this week and touched a two-week low level of 0.9589 during European session on Friday. The global flight to safety, amid intensifying rhetoric between the US and N. Korea, had been one of the key factors boosting demand for traditional safe-haven assets and weighing on the major.

This coupled with Thursday's dismal US PPI might have dampened expectations of any additional Fed rate hike action by the end of this year, which eventually triggered a fresh wave of US Dollar selling pressure and further collaborated to the pair's downslide for the third consecutive session. 

The pair, however, has managed to bounce off around 25-30 pips from session lows and is currently trading around the 0.9615-20 band as investors now look forward to the much awaited US CPI print. Today's inflation data would have a significant impact on the Fed's near-term monetary policy outlook and hence, would be a key determinant of the pair's movement in the near-term.

   •  US CPI: Looking for a 0.1% rise in headline prices - Westpac

Also in focus would be speeches from a couple of FOMC members - Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari, which would also be looked upon for some trading impetus on the last trading day of the week. 

   •  USD/CHF could slip back to the 0.9530 area – Commerzbank

Technical levels to watch

A follow through recovery is likely to confront immediate resistance near mid-0.9600s, above which the pair is likely to dart towards reclaiming the 0.9700 handle en-route its next major hurdle near 0.9740 level. 

On the flip side, sustained weakness below the 0.9600-0.9590 region could accelerate the fall towards 0.9555 horizontal support before the pair eventually drops back towards the key 0.95 psychological mark.