USD/CHF refreshes 2-week lows on USD sell-off
After closing the previous day above the 0.97 handle, the USD/CHF pair failed to build on its gains and came under pressure on Tuesday as the greenback started to record losses against its major rivals. The pair dropped to its lowest level since June 14 at 0.9648 in the last hour and is now trading at 0.9658, down 0.68% on the day.
Although the US Dollar Index had been able to stay above the 97 handle for the past 6 trading days, it failed to gather any bullish momentum, suggesting that investors remained on the sidelines. Following ECB President Draghi's bullish comments, the sharp upsurge witnessed in the EUR/USD pair triggered a USD sell-off, pushing the DXY to its lowest level in two weeks at 96.49. With a break below the 96.30 mark, the seven-month low, another selling wave could hit the greenback.
On the other hand, the CHF gathered further strength as a safe haven. With the exception of UK's FTSE 100, major equity indexes in Europe dropped sharply on Tuesday, suggesting that the risk-appetite is not present in the markets.
Later in the session, FOMC member Harker's statements (15:15 GMT) will be looked upon for the next catalyst ahead of Fed Chairwoman Janet Yellen's (17:00 GMT) and FOMC member Kashkari's (dove) (21:30 GMT) speeches.
Technical outlook
The RSI on the 4-hour chart hasn't reached oversold area yet, suggesting that the pair could drop further before it makes a technical correction. 0.9640 (Jun. 14 low) could be seen as the first technical support followed by 0.9610 (Jun. 6 low) and 0.9500 (psychological level). On the upside, resistances align at 0.9700 (psychological level/20-DMA), 0.9765 (Jun. 20 low) and 0.9850 (May 17 high).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
