USD/CHF holds on to modest gains above 0.9950
- US Dollar Index recovers after testing the 95 mark on Wednesday.
- Markets will be watching the 10-year T-bond auction.
The USD/CHF pair is trading in a tight 30 pip range on Wednesday and is having a difficult time setting its next short-term direction. As of writing, the pair was trading at 0.9960, adding 0.06% on the day.
The pair's price action seems to be driven by the greenback valuation. The US Dollar Index, which eased toward the 95 handle during the late Asian session amid a risk-averse environment, gained traction in the European trading hours and turned positive on the day above the 95.20 mark. At the moment, the index is up 0.12% on the day at 95.30.
There won't be any significant macroeconomic data releases from the United States on Wednesday and markets will be focused on the 10-year T-bond auction. Yesterday's auction saw that 434 billion worth of 3-year bonds sold at its highest level since May at 2.765% and helped the greenback gather strength. As of writing, the 10-year T-bond yield is virtually unchanged on a daily basis at %2.98 and an advance above the 3% mark could help the DXY end the day on a strong note.
Furthermore, major equity indexes in the U.S. have been recording decisive gains since the start of the week and are now a touching distance of their record levels. The risk perception in the NA session could also have an impact on the pair's price action.
Technical outlook
The pair could face the initial support at 0.9935 (daily low/50-DMA) ahead of 0.9910/0.9900 (100-DMA/psychological level) and 0.9865 (Jul. 31 low). On the upside, resistances align at 0.9970 (daily high), 1.0000 (parity) and 1.0065 (Jul. 13 low).