“¢ Escalating US-China trade tensions kept a lid on the early positive momentum.
“¢ A modest USD retracement prompts some fresh selling over the past hour.
The USD/CHF pair struggled to build on its positive momentum and has now surrendered the majority of its early gains, closer to over one-week tops.
For the second consecutive session, the pair met with some fresh supply near the 0.9950-60 region and was being capped by escalating US-China trade tensions after the Trump administration threatened to impose additional tariffs on around $200 billion worth of Chinese imports.
This coupled with a global wave of risk-aversion trade, evident from a sea of red across equity markets, extended some additional support to the Swiss Franc’s safe-haven appeal and further collaborated towards keeping a lid on the pair’s up-move.
Moreover, the latest leg of sharp fall of around 30-35 pips over the past hour or so could be attributed to a modest US Dollar retracement, led by a sharp spike in the EUR/USD major on the back of the latest ECB headlines.
Meanwhile, traders seem to have largely negated today’s hotter-than-expected US PPI print for June, coming in to show m/m rise of 0.3%. The yearly rate jumped a whopping 3.4%, the highest since Nov. 2011 but did little to revive the USD demand.
It would now be interesting to see if the pair is able to find any fresh buying interest at lower levels as market participants now look forward to the Atlanta Fed President Raphael Bostic’s scheduled speech ahead of the more relevant US consumer inflation figures on Thursday.
Technical levels to watch
A follow-through weakness below the 0.9900 handle is likely to get extended back towards the 0.9860 strong horizontal support before the pair eventually aims towards testing sub-0.9800 level.
On the upside, the 0.9950-60 region might continue to act as an immediate hurdle, above which the bulls are likely to make a fresh attempt towards reclaiming the parity mark.
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