USD/CHF trims gains to 0.9740, back below 50-DMA

Having posted a daily high at 0.9760, the USD/CHF pair trimmed some of its gains and is now hovering back below 50-day SMA to currently trade around 0.9740 region.

The Swiss Franc is benefitting from lower-than-expected drop in PPI data for July, forcing the pair to retrace from a broader strength in the greenback led recovery gains. 

Despite of its recent weakness, the pair has managed to rebound from 100-day SMA region and has held 50-day SMA on daily closing basis. However, the US Dollar has been solely driven on hopes of an eventual Fed rate-hike action in 2016.

With only the scheduled release of Empire State Manufacturing Index, later during NA trading session, a relatively lighter economic docket is unlikely to provide any respite and might weigh on the US Dollar.

However, given that the pair has repeatedly managed to find support at lower levels, any further buying interest might trigger a short-covering bounce and help pair to register some meaningful recovery.

Technical levels to watch

From current levels, weakness below session low support near 0.9730, and a subsequent break below Friday's swing low support near 0.9708, is likely to turn the pair vulnerable to drop back towards 0.9640 strong horizontal support.

Meanwhile, in order to increase the prospects of further recovery, the pair needs to sustain its recovery strength above 0.9750 resistance, above which the short-covering could lift the pair immediately towards 0.9780-85 intermediate resistance ahead of 0.9820 strong resistance.