USD/CHF rebounds from 2-week old trading range support
• USD weakness/risk-off mood exerting pressure.
• US tax reform announcement holds the key.
The USD/CHF pair once again failed to sustained early up-move beyond the parity mark and dropped to the lower end of its two-week-old trading range.
The pair, however, has managed to quickly recover around 20-25 pips from session lows and is currently trading around the 0.9965-70 region. The US Dollar selling bias remained unabated through the early NA session and continued exerting downward pressure on the major.
Adding to this, a sharp fall across European equity markets was also seen benefitting the Swiss Franc's safe-haven appeal and further collaborated to the pair's sharp downslide over the past couple of hours.
Meanwhile, possibilities of some repositioning trade, ahead of the US tax reform announcement, could also be one of the factors contributing to some volatility across the FX markets.
• USD consolidates as the US fiscal drama plays out - BBH
The pair, however, has held within the well-defined boundaries since late October and hence, it would be prudent to wait for a clear break before anticipating the next leg of directional move.
In the meantime, today's release of weekly initial jobless claims data from the US would be looked upon for some trading impetus ahead of the SNB Governing Board Chairman Thomas Jordan's in Frankfurt, Germany.
Technical levels to watch
Bears would be eyeing for a clear breakthrough 0.9940 strong horizontal support, below which the pair is likely to accelerate the slide back towards the 0.9900 handle en-route 0.9865 support.
On the upside, sustained momentum above the parity market might continue to confront some fresh supply near the 1.0040 region, which if cleared might trigger a short-covering bounce toward the 1.0100 handle.