USD/CHF below parity among USD profit-taking

• USD/CHF is in correction mode after nearly 900-pip gain as USD bulls are booking profits.
• The main macroeconomic drivers will be the US retail sales report due on Tuesday.

The USD/CHF is trading at around 0.9984 down 0.19% on Monday.

In Asia and Europe, the Swissy coiled around the parity level. A couple of hours before the American forex session, bears took the lead and drove the pair from the parity level down 40 pips to 0.9960 level. 

The pair is currently driven by investors profit-taking on the long USD multi-week trade and to a lesser extent by a mild downtick in European equities backed by concerns by the political situation in Italy, whereas the Swiss franc is seen as a safe-haven currency. 

The main drivers this week include the US retail sales report for April on Tuesday and partially by the set of the Eurozone and German GDP data that can impact the Swiss franc in tandem with the EUR. Looking further, Wednesday will see the inflation (CPI) data from both the Eurozone and Germany. It is worth noting that high volatility is to be expected on GDP and inflation data as those are tier-one indicators closely watched by central banks to adjust interest rates.

Additionally, Wednesday will see Mario Draghi European Central Bank’s President speaking as well as his Swiss counterpart, Thomas Jordan, the Chairman of the Swiss National Bank. 

On the broader picture, the USD/CHF pair appreciated nearly 900 pips since mid-February on the back of speculation that the Federal Reserve Bank would raise interest rates three to four times in 2018. Last week, the pair found some heavy resistance at the 1-year high at the 1.0050 level and is acting now as a line-in-the-sand if bulls want to extend the trend higher. Recent US data such as the Non-Farm Payroll and inflation came below expectations and investors are taking some profits off the table as they are assessing whether the Fed will raise three or four times in 2018. 

USD/CHF 4-hour chart 

The main trend is up, but the market is now in correcting lower. Immediate support is seen at 0.9957, low of the day, then followed by the 0.9935 swing low and finally 0.9871 swing low. To the upside, bulls will likely meet resistance at the parity level, then at the 1.0050 level which is the high of the year and double top with one year ago.