USD/CHF turns positive above 0.97 as DXY gains traction on robust PMI data

After spending the majority of the day in the negative territory a little above the 0.97 handle, the USD/CHF pair gathered momentum in the early NA session and recovered its daily losses. As of writing, the pair was trading at 0.9740, up 0.03% on the day.

The pair's price action on Wednesday seems to be impacted by the US Dollar Index's movements. Following a drop to a fresh 2-day low at 93.10, the DXY retraced its daily losses after the ISM non-manufacturing PMI improved to 59.8, its best level in more than 12 years. Further details of the report showed that the Prices sub-index rose substantially by 8.4 points to its highest level since February 2012 and the Employment sub-index continued to push higher. Moreover, the private sector employment growth in the U.S. came in at 135K, beating the market expectation of 125K. 

• US: Economic activity in the non-manufacturing sector grew in September - ISM
• US: Private Sector Employment Increased by 135,000 Jobs in September - ADP

The US Dollar Index turned flat at 93.40 with the initial reaction to the data but struggled to extend its upside and was last seen at 93.30, down 0.15% on the day.

In the meantime, major equity indexes in the U.S. started the day slightly lower, helping the traditional safe-haven CHF remain resilient against the greenback for now. Later in the session, St. Louis Fed President James Bullard's and Fed Chair Janet Yellen's speeches will be looked upon for fresh impetus.

Technical outlook

Despite today's fluctuations, the pair remains stuck in a tight 40-pip and preserves its near-term neutral outlook. The pair could encounter the first hurdle at 0.9800 (psychological level/May 29 high) ahead of 0.9850 (May 17 high) and 0.9935 (Apr. 23 high). On the downside, supports could be seen at 0.9680 (Oct. 2 low), 0.9635 (100-DMA/50-DMA) and 0.9565 (Sep. 15 low).