USD/CHF turns negative below mid-0.96s amid flight-to-safety

The USD/CHF pair took advantage of the fact that there were no fresh headlines on the North Korea situation during the first half of the day and retraced a portion of yesterday's heavy losses to 0.9675. However, the pair failed to extend its gains in the NA session as major equity indexes started the day lower, suggesting that investors continue to stay away from risky assets. As of writing, the pair was trading at 0.9638, losing 0.03% on the day.

In the meantime, the lower-than-expected PPI reading from the U.S. forced the DXY to give back its daily earnings as the data dampened the expectations for an upbeat inflation growth data on Friday. The CPI, which will be released at 12:30 GMT on Friday, is expected to rise 0.2% on a monthly basis in July after staying unchanged in June. As of writing, the index was at 93.37, losing 0.03% on the day. 

• US: Producer price inflation suggests lack of pipeline price pressures - ING

Moreover, in his remarks, New York Fed President William Dudley said that he was expecting the year over year inflation measure to continue to be depressed for a while and added that weak USD should help boost import prices and push up the inflation.

• Fed's Dudley: Weak dollar should help boost import prices, help push up inflation
• Fed's Dudley: Modest wage growth reflects sluggish productivity

With no more data left in the remainder of the session, the market sentiment could impact the pair's price action and ramp up the demand for traditional safe havens like the CHF. As of writing, the Dow Jones Industrial Average was losing 0.6 while the S&P 500 was down 1%

Technical outlook

The RSI indicator on the H4 chart is moving further away from the 50 handle and is easing towards the 30 handle, suggesting that the short-term bearish momentum is still intact. Supports for the pair could be seen at 0.9620 (20-DMA), 0.9490 (Jul. 27 low) and 0.9400 (psychological level).On the upside, resistances align at 0.9675 (daily high), 0.9735 (Aug. 9 high) and 0.9800 (psychological level).