USD/CHF clings to daily gains near mid-0.99s as DXY stays above 96

• The USD preserves its bullish momentum on Tuesday.
• Fed’s Kaplan sees three more rate hikes until Jun 2019.
• Wall Street opens the day in the red.

After spending the Asian session in a tight range a little above the 0.99 handle, the USD/CHF pair extended higher and reached a daily high at 0.9956 in the early NA trading hours. As of writing, the pair was up 0.23% on the day at 0.9950.

The broad-based greenback strength seems to be the primary driver of the pair’s price action on Tuesday. The US Dollar Index, which tracks the USD against a basket of six major currencies, rose to its highest level since late August at 96.16 today and was last seen up 0.33% on a daily basis at 96.07. Commenting on the near-term monetary policy outlook,  Dallas Fed President Robert Kaplan stated that he was comfortable with three more rate hikes until June 2019. Regarding the inflation growth, Kaplan argued that tariffs, oil prices and the hot labour market could create upward pressures.  

In the meantime, Wall Street opened the day in the red to suggest that the risk-off mood is still dominating the markets. At the moment, the Dow Jones Industrial Average and the S&P 500 indexes  are down 0.5% and 0.25%, respectively. In case the U.S. stocks fail to recover its losses in the remainder of the day, the CHF’s losses against the buck could stay limited.  

The next significant macroeconomic data release that could have an impact on the pair will be tomorrow’s core-PPI from the U.S., which is expected to rise to 2.5% on a yearly basis in September from 2.3% recorded in August.

Technical levels to consider

With a decisive break above 0.9955 (daily high/Oct. 5 high), the pair could target 1.0000 (psychological level/parity) and 1.0065 (Jul. 13 high). On the downside, supports are located at 0.9900 (psychological level), 0.9855 (100-DMA) and 0.9775 (50-DMA/20-DMA).