USD/CHF struggles to reach parity as volatility remains low

• USD/CHF trades in a tight 50-pip range on Tuesday.
• Majors show technical movements ahead of FOMC meeting.
• Market sentiment fails to provide a catalyst.

After closing the previous day around mid-0.99s, the USD/CHF pair recorded modest gains on Tuesday but lost its bullish momentum before reaching the critical parity mark. As of writing, the pair was trading at 0.9980, adding 0.35% on the day.

US data couldn't boost the greenback

Today's data from the U.S. beat the market expectations but the DXY failed to gain traction as investors refrain from taking large positions ahead of tomorrow's FOMC meeting. The Employment Cost Index in the third quarter rose 0.7% while the Chicago PMI advanced to its highest level in more than 6 years at 66.2 in October. Following a knee-jerk spike up to 94.60, the US Dollar Index retreated to 94.50, where it's recording a 0.13% gain on the day.

• US: Compensation costs for civilian workers increased 0.7% in September
• US: October Chicago Business Barometer climbs to 66.2

On the other hand, the 10-year US T-Bond yield, which lost more than 2% on Monday and weighed on the greenback, is virtually unchanged on the day around 2.37%. Moreover, after a flat start to the day, major equity indexes in the U.S. are having a difficult time setting the course with the Dow Jones Industrial Average and the S&P 500 indexes both staying quiet near their opening levels.

• US stocks remain on track to post strong monthly gains

On Wednesday, SVME Purchasing Managers' Index from Switzerland will be released during the European trading hours but it's unlikely to cause any sharp fluctuations before the FOMC releases its monetary policy statement later in the NA session. 

• FOMC: Do not expect change in the target range for the federal funds rate - Rabobank

Technical levels to consider

The RSI indicator on the daily graph remains in the oversold area near the 70 mark, suggesting that the pair is likely to make a technical correction ahead of the next leg up. Above the critical 1.000 (psychological level/parity), the pair could aim for 1.0040 (Oct. 27 high) and 1.0080 (May 12 high). On the downside, supports could be seen at 0.9875 (Oct. 26 low), 0.9765 (200-DMA) and 0.9670 (100-DMA).