USD/CHF dips below 0.9800 handle amid cautious trade

Despite of Thursday recovery from 50-day SMA support, the USD/CHF pair is now finding difficulty in building on its recovery strength and has now erased early tepid gains to currently trade in negative territory, around 0.9800 handle.

The pair on Thursday fell sharply as the US Dollar remained on the back foot on improving global risk sentiment. Moreover, BOE's decision to leave its current monetary policy stance unchanged further boosted the bearish sentiment surrounding the greenback, taking the pair sharply lower to test 50-day SMA support near 0.9760 region. 

The pair, however, staged a recovery after the release of better-than-expected weekly jobless claims and PPI data from the US and managed to close above 0.9800 handle.

On the last trading day of the week, the pair remained on the back-foot as traders now look forward to key inflation data from Euro-zone and the US along with a flurry of US economic releases, which includes - retail sales data, manufacturing data (industrial production and Empire State manufacturing survey) and consumer confidence index. Today's economic data would now enable traders to determine the near-term direction of the pair.

Technical levels to watch

On the immediate downside, 50-day SMA near 0.9760 region closely followed by 100-day SMA near 0.9740 level remains immediate support levels to watch for. Failure to hold these support levels has the potential to drag the pair immediately towards 0.9700 handle, below which the pair seems to continue drifting lower towards testing its next major support near 0.9650 zone.

Conversely, momentum above 0.9825 level seems to boost the pair immediately towards the very important 200-day SMA resistance near 0.9850 region, which if conquered opens room for continuation of the pair's bullish momentum in the near-term. Sustained strength above 0.9850 resistance seems to lift the pair, initially towards 0.9900 handle and eventually towards May highs resistance near 0.9950 area.