- US Dollar Index extends losses below mid-94s.
- Higher risk appetite limits the pair’s losses.
- Wall Street looks to open the day in the positive territory.
After recording a modest 30-pip gain yesterday and erasing a small portion of last Friday’s sharp losses, the USD/CHF pair lost its traction on Tuesday and is now approaching the 0.99 mark. At the moment, the pair is trading at 0.9922, losing 0.14% on the day.
The pair’s price action today seems to be dominated by the greenback valuation. The US Dollar Index, which failed to break above the 95 mark on Monday, came under pressure and retraced its recent rally as it dropped below the 94.50 mark. Ahead of the ISM NY Business Conditions Index, factory orders, and IBD/TIPP Economic Optimism Index from the United States, the index is down 0.27% on the day at 94.35.
Meanwhile, the increasing appetite for risk helps the pair limit its losses. At the moment, Germany’s DAX and the UK’s FTSE indexes are up 1.5%, and 0.8% respectively. Moreover, the pre-market trading action points to a higher opening in major equity indexes in the U.S., which could continue to make it tough for the safe-haven CHF to preserve its strength.
Technical outlook
The pair could face the first technical support at 0.9915 (20-DMA) ahead of 0.9855 (Jun. 25 low), and 0.9790 (Jun. 7 high). On the upside, resistances align at 0.9930 (50-DMA), 1.0000 (psychological level/parity), and 1.0055 (May 9 low).
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