USD/CHF recovers towards 0.97, remains in tight trading range

The USD/CHF pair, which eased to a daily low at 0.9678 during the European session, recorded a modest recovery in the early NA trading hours and is now trading at 0.9700, losing 10 pips, or 0.1%, on the day.

The pair's price action seems to be driven by the greenback movements on Thursday. After refreshing its 15-month low on Wednesday at 92.39, the US Dollar Index gained traction on Thursday and retraced the majority of its losses. However, the index is having a difficult time gathering enough momentum to challenge the 93 mark. As of writing, the index was at 92.86, up 0.12% on the day.

Today's data from the U.S. showed that weekly initial jobless claims fell to 240,000 in the week ending July 29 and came slightly better compared to the market expectation of 242,000. However, the market reaction stayed relatively limited as investors are getting ready for tomorrow's important NFP report.

• US: Weekly initial claims was 240,000, a decrease of 5,000 from previous week
• US jobs: Conviction that we are at full employment remains relatively high – Goldman Sachs

On the other hand, major equity indexes in the U.S. started the day relatively quiet but Dow Jones Industrial Average remains close to its record highs above the 22K threshold while the S&P 500 is virtually unchanged on the day. The performance of Wall Street has been limiting the losses of the USD/CHF pair lately as traditional safe-havens like the CHF struggle to find demand in a risk-positive environment.

Markit will release the composite and the service sector PMI data for the United States in the session but they are unlikely to force the pair out of its daily trading range.

Technical outlook

The pair might need to make a daily close above 0.9700 (psychological level/Jul. 14 high) to extend its gains further to 0.9765 (100-DMA) and 0.9800 (psychological level). On the downside, supports are located at 0.9645 (Aug. 2 low), 0.9590 (Jul. 17 low) and 0.9490 (Jul. 26 low).