USD/CHF attempting a recovery after Tuesday’s sharp sell-off

Following Tuesday's sharp slide to test sub-0.9600 level, lowest level since June 24, the USD/CHF pair is attempting to recover some of its lost ground and is now trading comfortable above 0.9600 handle around 0.9630 region.

The pair on Tuesday remained under intense selling pressure and fell to an eight-week low as investors seemed unconvinced that the Federal Reserve will go ahead and raise interest rates in 2016. The pair failed to gain any respite from US data that showed CPI remained flat in July. 

However, comments from New York Fed president William Dudley's comments that the Federal Reserve was moving closer to raise interest rates further, as soon as in September. Hence, markets now keenly await for the release of FOMC meeting minutes, later during NY trading session, which will provide insight over the Fed's monetary policy outlook for the rest of 2016 and help determine the near-term direction for the greenback.

During European session, release of Swiss ZEW data might provide immediate momentum play for short-term traders. 

Technical levels to watch

On a sustained recovery above 0.9640 level, the pair seems to extend its recovery trend back towards 0.9700 handle, which if cleared would negate any near-term bearish outlook and lift the pair back towards 0.9735-45 strong resistance (100-day and 50-day SMAs).

Meanwhile on the downside, a short-term ascending trend-line near 0.9600-0.9590 region remains immediate support to defend, below which a fresh leg of weakness is likely to drag the pair back towards June swing lows support near 0.9520 level.