USD/CHF tumbles to lows, risks breaking below 0.9900 handle

   “¢   The prevalent USD selling bias exerts some heavy selling on Monday.
   “¢   Reviving safe-haven demand boosts CHF and adds to the downward pressure.
   “¢   Sustained weakness below 0.9990 handle might open room for further decline.

The USD/CHF pair continued losing ground through the early North-American session and has now moved on the verge of breaking below the 0.9900 handle.

The pair extended its retracement slide from the 0.9980 region, one-week tops touched on Friday and was further weighed down by the prevalent US Dollar selling bias at the start of a new trading week.  

Having failed to benefit from Friday’s advance US Q2 GDP growth figures, the USD held on the defensive and seemed largely unaffected by a goodish pickup in the US Treasury bond yields.

This coupled with cautious mood across equity markets underpinned the Swiss Franc’s safe-haven appeal and exerted some additional downward pressure on the major. Meanwhile, the latest leg of a sharp decline over the past hour or so could also be attributed to some technical selling below European session lows support near the 0.9920.  

Further downside, however, remained limited, at least for the time being, following the release of better-than-expected pending home sales data from the US, coming in to show a rise of 0.9% in June.  

With today’s downfall, the pair has now reversed all of the modest gains recorded in the previous week and hence, a follow-through weakness would mark a fresh bearish breakdown and open room for an additional downfall in the near-term.  

Technical levels to watch

Weakening trend below the 0.9900 handle is likely to get extended towards 0.9860-55 horizontal support, which if broken might turn the pair vulnerable to head towards testing the very important 200-day SMA support or sub-0.9800 level.

On the flip side, any meaningful rebound now seems to confront immediate resistance near the 0.9935 horizontal zone, above which the pair is likely to make a fresh attempt towards clearing 0.9975-80 supply zone before aiming to reclaim the parity mark.