USD/CHF drops to fresh four-month low as greenback extends losses

• USD/CHF remains week for the fifth consecutive week.
• Cautious optimism surrounding the phase-one, a lack of major data and positive performance of commodities seem to weigh on the USD.
• Second-tier data from the US and Switzerland will be watched closely for fresh impulse.

USD/CHF declines to 0.9720 amid mildly active trading session on early Monday. The pair has been weighed down by the broad US Dollar (USD) losses off-late.

With the increasing optimism surrounding the US-China trade deal, coupled with the year-end sparse trading, investors rush towards cashing out their greenback gains earned previously. Additionally, China’s rant to the US and the US-Middle East tussle seem to add a burden on the pair.

Market’s risk tone seems to lose its earlier strength as the US 10-year treasury yields and the S&P 500 Futures dwindle around 1.875% and 3,240 respectively.

The current fall could also be attributed to the traders’ wait for the second-tier data from the US and Switzerland. Among them, Swiss KOF Leading Indicator for December, expected 94.5 versus 93.0 prior, will be the first to watch.

Following that, the US Pending Home Sales for November and the December month results for Chicago Purchasing Managers’ Index (PMI) and Dallas Fed Manufacturing Business Index will be the key to follow. Forecasts suggest an overall recovery in the scheduled statistics, which in turn could trigger a pullback in the greenback. Even so, year-end thin trading conditions are likely to keep the momentum in check.

Technical Analysis

Late-August month low near 0.9715, adjacent to 0.9700 mark, seems to question sellers for now while the yearly bottom close to 0.9660 can challenge the Bears afterward. Meanwhile, buyers will look for entry only if the pair successfully trades beyond October month low near 0.9840.