USD/CHF turns negative near 0.9950 as Wall Street slumps

• USD/CHF reverses course before reaching parity.
• Negative market sentiment is helping the CHF retrace its losses against the buck.
• DXY looks to end the day in the red below the 95 mark.

The USD/CHF pair came within a touching distance of the critical parity level in the European session on the back of the greenback strength but failed to preserve its bullish momentum. As of writing, the pair was trading at 0.9950, losing 0.2% on the day.

Earlier in the day, the US Dollar Index touched its highest level in nearly a year at 95.15 as investor continued to price the monetary policy differences between the ECB and the Fed. However, a mixed batch of macroeconomic data releases from the United States and falling T-bond yield forced the greenback to give back its daily gains. At the moment, the DXY is down 0.2% on the day at 94.75.

The data from the United States showed that the industrial production contracted by 0.1% in May following a 0.9% expansion in April. On the other hand, the Consumer Sentiment Index released by the University of Michigan rose to 99.3 from 98 in its first preliminary reading.

On the other hand, major equity indexes in the United States started the day on a weak not and continued to push lower with the Dow Jones Industrial Average and the S&P 500 losing 0.8% and 0.5% at the moment respectively. Furthermore, the 10-year T-bond yield is down 1.5%, reflecting a risk-off mood which benefits the safe-haven CHF.

Technical levels to consider

On the upside, 1.0000 (parity/psychological level) aligns as the first critical resistance ahead of 1.0055 (May 9 high) and 1.0095/1.0100 (May 10, 2017, high/psychological level). On the downside, supports could be encountered at 0.9915 (50-DMA), 0.9880 (20-DMA) and 0.9790 (Jun. 7 low).