USD/CHF plummets to multi-week lows on mixed US data
- USD/CHF extends losses on broad-based greenback weakness.
- Core CPI in the U.S. rises to 1.8% on a yearly basis.
- US stocks start the day under pressure.
After closing the previous day with a loss 70 pips, the USD/CHF pair extended its downside and reached its lowest level since October 24 at 0.9845 before retracing a small portion of its daily drop. At the moment, the pair is trading at 0.9860, down 0.35% on the day.
The greenback met a fresh selling pressure in the early NA session after the data the U.S. Bureau of Labor Statistics revealed that the annual inflation growth measured by the CPI eased to 2% in October from 2.2% in September. Although this data came in line with the market's estimate, the CME Group FedWatch Tool's rate hike probability for December eased to 91.5% from 96.7%, dragging the US Dollar Index to its level in nearly a month at 93.30.
- US: CPI for all items increases 0.1% in October as shelter index rises
Other data from the U.S. showed that retail sales increased by 0.2% in October following September's robust 1.9% rise while the Empire State Manufacturing Index fell to 19.4 in November from 30.2 in October. At the moment, the DXY is at 93.54, losing 0.2% on the day.
With the data out of the way, investors are going to look for developments surrounding the Republicans' tax plan. Earlier in the session, U.S. House of Representatives Speaker Paul Ryan said that House Republicans could approve reconciled tax reform bill that includes repeal of Obamacare mandate.Despite Ryan's relatively optimistic remarks, major equity indexes in the U.S. started the day under pressure with the Dow Jones Industrial Average and the S&P 500 indexes losing 0.6% and 0.8% respectively, allowing the safe-haven CFH to preserve its strength against the buck.
- US Speaker Ryan: Working on improving tax bill - CNBC
Technical levels to consider
The pair could face the initial support at 0.9830 (50-DMA) ahead of 0.9765 (200-DMA) and 0.9700 (psychological level). On the upside, FXStreet's Technical Confluences Indicator determines a strong resistance at 0.9900 (psychological level/ Fibo 38.2% retracement of 1-month range). With a decisive break above this level, the pair could extend its recovery toward 0.9960 (20-DMA) and 1.000 (parity).