USD/CHF consolidates daily losses, remains below 0.96

After starting the day under pressure, the USD/CHF pair lost nearly 100-pips to refresh its daily low at 0.9555. However, with the trading volume thinning out in the last hour amid the Labor Day holiday in the U.S., the pair went into a consolidation phase and is now trading at 0.9575, losing 0.76%, on the day.

News of North Korea testing a hydrogen bomb over the weekend triggered a flight-to-safety at the beginning of the week, increasing the demand safe-haven assets like the CHF. The weakening risk appetite also negatively impacted major global equity indexes, pushing the Nikkei 225 Index 0.93% lower in the Asian session. With no more data left in the remainder of the session, the pair is likely to move sideways.

In the European session on Tuesday, the economic docket will feature the GDP growth data from Switzerland, which is expected to remain unchanged at 1.1% in the second quarter on a yearly basis and improve to 0.5% from 0.3% on a quarterly basis. Another significant data for the CHF on Tuesday will be the CPI. After contracting 0.3% in July, the inflation is estimated to return to 0% on a monthly basis in August. Later in the day, FOMC members Brainard, Kashkari and Kaplan's remarks will be watched closely for fresh clues regarding the balance sheet reduction and another 25 bps rate hike before the end of the year.

Technical outlook

The pair could face the initial support at 0.9550 (daily low) ahead of 0.9500 (psychological level) and 0.9430 (Aug. 29 low). On the upside, resistances could be seen at 0.9625 (50-DMA), 0.9675 (100-DMA) and 0.9760 (Aug. 16 high). On the daily graph, the RSI indicator is moving lower towards the 30 mark, suggesting that the bearish momentum is building up. 

• USD/CHF rallies face initial hurdle around 0.9700 – Commerzbank