USD/CHF finds support near 200-DMA, corrects above parity

The USD/CHF pair lost more than 80 pips on Friday and dropped below the parity level as the greenback erased most of its weekly gains following the weak macro data from the United States and the dovish statements from the FOMC members. After refreshing its three-day low at 0.9990, the pair was able to start a correction move from there as the 200-DMA formed a strong base. As of writing, the pair was trading at 1.0020, down 0.6% on the day.

After spending the last couple of session in a tight range around 99.50, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, dropped quickly towards the 99 handle as the weak inflation increase in the United States hurt the expectations of a June rate hike. Furthermore, the weak retail sales data forced the major equity indexes in the United States to have a weak opening, damaging the risk appetite and increasing the demand for the safe haven CHF.

• US: Advance estimates of U.S. retail and food services sales for April were $474.9 billion, an increase of 0.4%

Together with the data, the dovish tone that Chicago Fed President Evans adopted during an interview on Bloomberg TV prevented the greenback from making a meaningful correction in the session. At the moment, the index is at 99.17, a tad above its session low and losing 0.35%.

• Fed's Evans: Could be okay with one more rate hike if there are more uncertainties about inflation outlook

Technical outlook

The pair could face further bearish pressure with a decisive break below 1.0000/0.9995 (psychological level/200-DMA) and aim for 0.9960 (20-DMA) and 0.9890 (May 3 low). On the upside, the initial hurdle could be seen at 1.0085 (daily high) ahead of 1.0160 (Mar. 9 high) and 1.0200 (psychological level).