USD/CHF slumps to 0.9650 area on fresh USD selloff

• US Dollar Index drops to weekly lows below 97.30.
• Major European equity indexes trade mixed on Wednesday.
• SNB says FX intervention is part of monetary policy.

The USD/CHF pair erased nearly 40 pips on Tuesday after the United States decided to add Switzerland into its list of currency manipulators. Although the Swiss National Bank capped the CHF's gains by explaining that currency interventions were purely motivated by the monetary policy to disregard the labelling of "manipulator," the broad-based USD weakness caused the pair to extend its losses.

As of writing, the pair was trading at the lowest level of 2020 at 0.9655, erasing 0.18% on a daily basis. With a break below 0.9645, the pair will touch its lowest level since September of 2018.

USD Dollar Index turns south on Wednesday

Before the US and China sign the phase-one trade deal later in the day, the US Dollar Index lost its traction and broke below the tight range, in which it has been fluctuating start of the week. As of writing, the index was at its lowest level since January 8th at 97.25, down 0.14% on the day.

The strong performance of European currencies such as the EUR seems to be making it difficult for the greenback to find demand. The Producer Price Index (PPI) and the NY Fed's Empire State Manufacturing Survey will be featured in the US economic docket later in the day.

Technical levels to watch for