USD/CHF approaches parity as US dollar extends rally
- US Dollar Index rises to its highest level in more than two months on Tuesday.
- USD/CHF looks to test parity for the first time since late July.
- Comin up: Housing price index, new home sales, and Markit PMI from the U.S.
Another heavy sell-off surrounding major European currencies boosted the dollar on Wednesday and the USD/CHF pair broke out of its weekly trading range on its way to the critical parity mark. As of writing, the pair was up 0.9980, adding 0.3% on a daily basis.
Pressured by the disappointing PMI figures from Germany and the euro area combined with the Italian budget crisis, the shared currency fell to its lowest level against the buck in more than two months while the GBP/USD pair slumped below the 1.29 handle amid ongoing concerns about o potential leadership challenge against British Prime Minister Theresa May. "Euro and sterling risks against the dollar have balanced with Italy weighing on the euro and Brexit on the sterling. Today's euro/sterling range has been the tightest in four months," FXStreet Senior Analyst Joseph Trevisani notes.
Ahead of some housing data and the IHS Markit's Manufacturing and Services PMI figures from the U.S., the US Dollar Index stays near mid-96s, where it's up a little over 0.5% on the day. Later in the day, FOMC members Bullard, Bostic, and Mester's speeches will also be looked upon for fresh impetus.
Technical levels to consider
With a decisive break above 1.0000 (parity level), the pair could extend its gains toward 1.0035 (Jul. 18 high) and 1.0070 (Jul. 13 high). On the downside, supports could be seen at 0.9920 (20-DMA), 0.9850 (Oct. 15 low) and 0.9810 (200-DMA).