USD/CHF regains traction, 0.9700 handle back on sight

After yesterday's sharp pullback and a subsequent rebound, the USD/CHF pair regained traction on Tuesday and is now eyeing to move back towards the 0.9700 handle.

On Monday, the pair witnessed a sharp reversal from session high level of 0.9713 and tumbled over 50-pips to 0.9637 area. A fresh wave of greenback selling pressure, dragging the key US Dollar Index to its lowest level in 15-months could have been the only factor behind the pair's abrupt fall during NY trading session.

The fact that yesterday's heavy USD selling lacked any fundamental drivers, and was solely led by month-end flows, the pair managed to catch some fresh bids at lower level and traded with minor gains through early European session on Tuesday.

The prevalent risk-on environment, as depicted by positive trading sentiment around equity markets was seen weighing on the Swiss Franc's safe-haven appeal and helped the pair to regain some bullish traction. 

Looking at the broader picture, the pair has repeatedly failed to sustain its strength beyond the 0.9700 handle. Simultaneously, every pull-back turned out to be short-lived, which has eventually held the pair within a 3-day old trading range. Hence, it would be prudent to wait for a decisive breakout before positioning for the next leg of directional move. 

Today's US economic docket features the release of personal income/spending data, Core PCE Price Index and ISM manufacturing PMI, which would now be looked upon for some fresh impetus later during the NA session.

   •  Key US data on the cards tonight - Nomura

Technical levels to watch

Momentum back above the 0.9700 handle might continue to confront some fresh supply near the 0.9730 region (Friday's high), above which the pair is likely to aim towards testing June monthly highs resistance near 0.9765-70 region before darting towards the 0.9800 handle. 

On the flip side, any pull-back might continue to find some fresh buying interest near the 0.9640-35 region, which if broken would turn the pair vulnerable to head back towards the 0.9600 handle.