USD/CHF consolidates Tuesday's losses, moves above mid-0.95s

The USD/CHF pair, which lost more than 50 pips on Tuesday, dropped to a fresh weekly low at 0.9525 in the European session before starting to retrace its losses. As of writing the pair was trading at 0.9560, gaining 0.8% on the day. 

The pair's recovery on Wednesday seems to be fueled by an improving market sentiment. After recording heavy losses in the previous day, the German Dax Index is gaining more than 1%. Bargain-hunting could also help major equity indexes in the U.S. start the day higher, denting the demand further for safe-havens like the CHF.

On the other hand, the selling pressure on the greenback seems to have eased a little with the US Dollar Index moving sideways around yesterday's closing level of 92.25. The data from the U.S. showed that the international trade deficit increased to $43.7 billion on a monthly basis in July, but came better than the market estimate of $44.6 billion. 

• US: Goods and services deficit was $43.7 bln in July, up $0.1 bln from $43.5 bln in June

Later in the session, Markit and the ISM will both be releasing their respective PMI data for the service sector in the U.S. Higher-than-expected readings in these data could allow the DXY to rise into the positive territory. In the second half of the session Fed's Beige Book, which is conducted through interviews with key business contacts, economists, market experts, and other sources are gathered by each of the 12 Federal Reserve Districts, will be looked upon for fresh impetus.

Technical outlook

With today's modest recovery, the RSI indicator on the daily graph is moving higher towards the 50 mark, suggesting that the bearish momentum is fading away. The first technical support for the pair aligns at 0.9550 (Sept. 4 low) ahead of 0.9500 (psychological level) and 0.9430 (Aug. 29 low). On the upside, resistances could be seen at 0.9615 (20-DMA), 0.9660 (100-DMA) and 0.9760 (Aug. 16 high).