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  • Core-inflation growth loses momentum in August in the U.S.
  • US Dollar Index plummets to 2-week lows below 94.50 on Thursday.

After moving sideways around  the 0.97 mark for the majority of the day, the USD/CHF pair fell sharply as the disappointing CPI data from the United States triggered a broad-based USD selloff. The pair, which touched a fresh weekly low at 0.9658 in the last hour, was last seen trading at 0.9670, where it was down 0.4% on the day.

The data released by the U.S. Bureau of Labor Statistics  on Thursday showed that the inflation, measured by the Consumer Price Index, rose 0.2% in August to match July’s reading and fell short of the market expectation of 0.3%. More importantly, the core-CPI, which excludes volatile food and energy prices, rose 2.2% on a yearly basis in August and fell short of the analysts’ estimate of 2.4%.  

Commenting on the inflation report,  “The unexpected drop in US CPI in August undermines the supposed consumer price effect from tariffs, ¨Joseph Trevisani, FXStreet expert, said. The initial reaction to the data dragged the US Dollar Index to its lowest level of September at 94.43. At the moment, the index is down 0.27% on the day at 94.55.

Despite the dismal data, however, major equity indexes in the U.S. started the day on a positive note with the Dow Jones Industrial Average and the S&P 500 adding 0.7% and 0.6%, respectively. The improved market sentiment could help the pair limit its losses in the remainder of the day.

Technical levels to consider

The pair could face the first support at 0.9660 (daily low) ahead of 0.9580 (Apr.  17 low) and 0.9500 (psychological level). On the upside, resistances are located at 0.9700 (daily high), 0.9730 (200-DMA) and 0.9810 (Aug. 28 high).

Expert score

5

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