USD/CHF finds resistance at 0.9870 and retreats
- Spot hits 0.9870 and retreats erasing gains.
- USD positive momentum short-lived.
- Data: US ISM manufacturing index came in below expectations.
The USD/CHF pair gained momentum during the American session on the back of a stronger US Dollar. The pair printed a fresh daily high at 0.9870 but quickly pulled back toward the 0.9835 area. The US dollar rose supported by US Bond yields that moved off daily lows and lost strength after the release of the US ISM manufacturing index that came in at 58.2 below consensus.
Outlook and levels
On a weekly basis, the pair is still up but showing only modest gains of less than 50 pips. The upside has found a strong barrier around 0.9870/80. The greenback needs to break higher in order to clear the way to further gains.
The weekly gains do not appear to be enough to remove the bearish bias. USD/CHF still appears on the weekly chart to be headed toward the 20-SMA that stands at 0.9720. A break lower could open the doors to more losses toward 0.9610.
To the upside, the pair on Thursday and today failed to rise back above the 20-day moving average that stands at 0.9880. That area has become a critical level. As long as it remains below the bearish pressure is likely to persist. If it manages to climb on top a recovery above 0.9900 seems possible. The next strong barrier is seen at 0.9940.