Search ForexCrunch
  • US Dollar Index stays in the positive territory near 96.30.
  • Wall Street looks to open the day slightly lower.
  • Risk perception continues to dominate the markets.

The USD/CHF pair started the day with a small bearish gap on Monday as the TRY’s collapse continued to ramp up the demand for safe havens such as the CHF. After dropping to a daily low near 0.9920, however, the broad-based USD strength allowed the pair to retrace its losses and turn flat on the day near 0.9950.

The US Dollar Index, which refreshed its highest level in more than a year at 96.55 earlier today, is now in a consolidation phase near 96.25 as investors are waiting for Wall Street to open. Fears of the potential negative impact of European financial institutions’ exposure to Turkish lira weighed on the major European indices on Monday. At the moment, Germany’s DAX is down 0.4% on the day while the UK FTSE is losing 0.35%. In the meantime, Turkey’s BIST 100 is losing more than 4%.

In the pre-market trading hours, both the Dow Jones Industrial Average and the S&P 500 indexes are recording modest  losses to suggest a negative opening. If investors continue to stay away from risk-sensitive assets in the second half of the day, we could see the CHF preserve its strength. There won’t be any macroeconomic data releases from the United States on Monday.

Technical outlook

On the downside, the initial support for the pair is located at 0.9925 (100-DMA) ahead of 0.9875 (Jul. 30 low) and 0.9825 (Jun. 14 low). On the upside, resistances could be seen at 0.9955 (daily high), 1.0000 (parity level/psychological level) and 1.0065 (Jul. 13 high).