USD/CHF retraces post-US CPI losses, turns positive above 0.96

The USD/CHF pair plummeted to a fresh 2-week low at 0.9584 in the early NA session after the disappointing consumer inflation data from the U.S. triggered a USD sell-off. However, the pair easily reversed course and took back its daily losses and turned positive on the day. As of writing, the pair was trading at 0.9630, up 0.03% on the day.

The pair's recent sharp fluctuation seems to be a product of the USD movement. After easing below the 93 mark in a quick manner, the US Dollar Index quickly recovered the majority of its knee-jerk slump. Although the CPI in the U.S. failed to meet the market expectations as it came in at 0.1% on a monthly basis in July, the negative impact on the greenback faded away quickly. The fact that the Fed uses the core PCE price index as its primary measure of inflation instead of the CPI limits the market's reaction to today's data.

• US: CPI for all urban consumers rose 0.1% in July on a seasonally adjusted basis
• US: Real average hourly earnings for all employees increased 0.2% from June to July

On the other hand, the demand for safe-havens, which has been helping the CHF gather strength against its rivals throughout the week, seems to have weakened a bit on Friday as no fresh headlines surrounding the geopolitical tension between North Korea and the United States grabbed investors' attention.

In the meantime, Dallas Fed President Robert Kaplan recently crossed the wires, reiterating that he wanted to see more evidence of progress toward the inflation goal before deciding on the next rate hike.  

Technical outlook

Although the bearish momentum seems to have faded on Friday, the pair is still looking to close the week with a loss of more than 100 pips. The RSI indicator on the daily graph is now moving sideways around the 50 handle, supporting the view that the pair went into a consolidation phase. The pair faces the initial near-term support at 0.9620 (20-DMA) ahead of 0.9490 (Jul. 27 low) and 0.9400 (psychological level).On the upside, resistances could be seen at 0.9675 (Aug. 10 high), 0.9735 (Aug. 9 high) and 0.9800 (psychological level).

• USD/CHF could slip back to the 0.9530 area – Commerzbank