USD/CHF slumps to session lows below mid-0.96s as DXY erases daily gains

The USD/CHF came in under a renewed selling pressure in the last hour and dropped to a fresh session low at 0.9633. As of writing, the pair was trading at 0.9642, losing 0.3% on the day.

The pair's downfall in the first half of the NA session seems to be caused by a sharp fall witnessed on the US Dollar Index. After spending the majority of the day correcting yesterday's losses, the index lost its footing and plummeted to 92.64 after a mixed batch of macro data releases from the United States.

Earlier in the session, the core PCE price index eased to 1.4% from 1.5% in June on a yearly basis but came in above the market expectation of 1.3%. However, a potential positive impact of the PCE data on the USD was offset by a weaker-than-expected personal income reading, which came in at 0% on a monthly basis in June after rising 0.3% in May and missed the market consensus of 0.4%.

• US: Personal income decreased $3.5 billion (less than -0.1%) in June
• US: PCE price index increased less than 0.1%

The second batch of macro data from the U.S. also failed to paint a clear picture of the health of the manufacturing sector in the country. Markit announced that the final US Manufacturing PMI registered 53.3 in July, up from 52.0 in June to signal a further improvement in the health of the sector while the ISM's version of the same data eased to 56.3 in July from 57.8 in June. Further details of the ISM's report revealed that the Employment Sub-index fell by 2 points to 55.2 in July.

• US: Manufacturing PMI registered 53.3 in July, up from 52.0 in June - Markit
• US: Economic activity in the manufacturing sector expanded in July - ISM

While investors digest today's data, major equity indexes in the U.S., boosted by the solid gains seen in European indexes, started the day higher, suggesting that a high appetite for risk is present in the session. As one of the traditional safe-havens, the CHF could have a tough time gathering further strength against the greenback.

• US stocks regain bullish traction, Dow eyeing 22,000 milestone

Technical outlook

With this latest drop, the RSI on the H4 chart eased to the 50 mark but doesn't signal a bearish momentum build up yet as it remains in the neutral zone. On the upside, 0.9700 (psychological level/Jul. 14 high) could be seen as the initial hurdle ahead of 0.9740 (Jun. 26 high) and 0.9770 (100-DMA). On the downside, supports align at 0.9630 (daily low), 0.9590 (Jul. 17 low) and 0.9490 (Jul. 26 low).