USD/CHF Slips Below 0.9900 Handle ahead of US ISM Manufacturing PMI
Despite of a lower-than-expected Swiss GDP print, the USD/CHF pair once again failed to extend its bullish momentum beyond 0.9950 and has now dropped below 0.9900 handle.
On Tuesday, the pair recovered from session low of 0.9887 and attempted a move back above 0.9950 after the release of US economic data. Data released from the US on Tuesday showed consumer spending jumped 1% in April, while the PCE price index, the Fed's preferred gauge of inflation, showed prices rose 1.1% in the past 12 months. Meanwhile, Chicago PMI print for May showed weakness in economic activity in Chicago-area. The PMI fell below 50, indicating contraction to 49.3, its lowest level since February.
From Switzerland's first-quarter GDP, reported on Wednesday, showed a muted quarterly growth of 0.1%. The reading was below 0.3% expected growth and also below Q4 2015 quarterly growth of 0.4%.
The pair ignored weaker Swiss GDP print and reversed from 0.9950 strong resistance as investors now brace for a slew of economic releases from the US, including today's ISM manufacturing PMI data ahead of the keenly watched monthly jobs report on Friday.
Technical levels to watch
Sustained weakness below 0.9900 handle and a follow through selling pressure below 0.9870 support, now seems to accelerate the downfall towards retesting an important confluence resistance break-point, turned immediate strong support, near 0.9835 region.
On the flip side, momentum above 0.9950-55 strong resistance now seems to set the stage for extension of the pair's near-term upward trajectory immediately towards reclaiming parity and eventually towards March highs resistance near 1.0085-90 zone.