USD/CHF retreats to 0.9700 area as DXY drops to fresh weekly lows

• USD/CHF struggles to hold above 0.9700 on Tuesday.
• US Dollar Index extends slide following Monday’s sharp drop.
• FOMC Chairman Powell will testify before Senate Banking Committee.

The USD/CHF pair spent the majority of the day moving sideways in a tight range around 0.9720 but came under a modest bearish pressure ahead of the American session. As of writing, the pair was posting small daily losses at 0.9705.

USD remains on the backfoot

The poor performance of the USD seems to be causing the pair to lose its traction. Ahead of FOMC Chairman Powell’s testimony before the Senate Banking Committee, the US Dollar Index (DXY) is at its lowest level in a week at 99.30.

Previewing this event, “Even though the White House and the Fed have taken slightly different paths in the last few weeks with Mr. Powell advocating more fiscal spending and Secretary Mnuchin suggesting an assessment period for the current stimulus before providing more, the two are likely to stress the complementary nature of the government measures,” said FXStreet analyst Joseph Trevisani.

Meanwhile, following Monday’s risk rally, financial markets have turned risk-averse on Tuesday, helping the CHF stay resilient against its rivals. At the moment,  Germany’s DAX and the Euro Stoxx 50 indexes are down 0.55% and 0.8%, respectively.

In the second half of the day, the only data featured in the US economic docket will be the Housing Starts and the Building Permits.

Technical levels to watch for