USD/CHF steadies below 0.9950, looks to close the week flat

  • Core-CPI in the U.S. bear expectations in July.
  • US Dollar Index looks to close the week above 96.
  • Flight-to-safety allows CHF to recover its losses.

The broad-based USD strength during the first half of the day lifted the USD/CHF pair to a fresh weekly high at 0.9975. However, the pair reversed its course as major equity indexes in the U.S. started the day to point out to a risk-off mood in the markets. As of writing, the pair was flat both on the day and the week near 0.9935.

The data released by the U.S.  Bureau of Labor Statistics on Friday showed that on a yearly basis the Consumer Price Index for all items less food and energy rose 2.4% to record its highest reading since September 2008 and confirmed the expectations of the Fed making two more rate hikes before the end of the year. Boosted by the data, the US Dollar Index rose to 96.30 for the first time in 13 months. At the moment, the index is at 96.22, up 0.65% on the day.

On the other hand, concerns regarding the weak performance of the EM economies heightened on Friday with the Turkish lira losing as much as 20% against the USD. Shares of European financial institutions with high exposure to Turkish assets recorded sharp losses and the negative mood weighed on major equity indexes in the U.S. Taking advantage of the risk aversion, the CHF found demand as a safe-haven. As of writing, the Dow Jones Industrial Average and the S&P 500 were down 0.7% and 0.5% on the day, respectively.

Technical levels to consider

The initial support for the pair aligns at 0.9920 (100-DMA) ahead of 0.9865 (Jul. 31 low) and 0.9790 (Jun. 7 low). On the other hand, resistances are located at 0.9950 (Aug. 9 high), 1.0000 (parity level) and 1.0065 (Jul. 13 low).

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