“¢ The downward trajectory remains uninterrupted despite easing USD bearish pressure.
“¢ Traders largely shrugged off weaker than expected Swiss KOF Economic Indicator.
“¢ Technical selling below 200-DMA seems to be a key factor dragging the pair lower.
After an initial uptick to 0.9715 area, the USD/CHF pair met with some fresh supply and dropped to 4-1/2 month lows in the last hour.
The selling pressure remains unabated for the fourth consecutive session and seemed largely unaffected by a modest US Dollar rebound, supported by an upward revision of the US GDP growth figures on Wednesday.
Bearish traders seemed inspired by the fact that the pair, on Wednesday, decisively broke below the very important 200-day SMA support for the first time since April, confirming a near-term breakdown.
Hence, today’s downfall below the 0.9700 handle could be attributed to some follow-through technical selling, with a weaker opening across European bourses benefitting the Swiss Franc’s safe-haven appeal and further collaborating to the weaker tone.
Meanwhile, a weaker than expected release of the Swiss KOF leading economic indicator, coming in at 100.3 for August as compared to last month’s upwardly revised 101.7, also did little to lend any support and ease the prevailing bearish pressure surrounding the major.
Moving ahead, traders now look forward to the US economic docket, featuring the release of core PCE price index, personal income/spending data and the usual initial weekly jobless claims, in order to grab some short-term opportunities.
Technical levels to watch
A follow-through selling has the potential to continue dragging the pair towards 0.9655-50 intermediate support en-route the 0.9600 handle and the 0.9580 region. On the flip side, any meaningful recovery attempts might now confront fresh supply near the 0.9730 area and is closely followed by the 0.9750-55 region (200-day SMA).
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