USD/CHF jumps above mid-0.97s on upbeat ISM PMI data

• US Dollar Index extends higher toward 96 on Tuesday.
• Markit and PMI data show strong momentum in the manufacturing sector.
• Wall Street starts the day in the red.

After moving sideways in a very tight range on Monday, the broad-based greenback strength today helped the USD/CHF pair gain traction and start retracing a majority of last week's losses. At the moment, the pair is trading at its highest level in nearly a week at 0.9765, adding 0.75% on the day.

Today's data from the U.S. showed that the business activity in the manufacturing sector expanded at a faster-than-expected rate in August with both the ISM and Markit Manufacturing PMI figures beating the analysts' estimates. The US Dollar Index, which stayed quiet above the 95 mark on Monday, rose to a fresh 2-week high at 95.75 with the initial reaction to the data and was last seen up 0.55% on a daily basis at 95.65.

In the meantime, major equity indexes started the day on a negative tone with the Dow Jones Industrial Average and the S&P 500 falling 0.3% and 0.15% respectively. Although the risk-off mood could help the CHF stay resilient against the buck as a safe-haven, the greenback's market valuation is likely to continue to drive the pair's price action.

There won't be any other macroeconomic data releases from the U.S. in the remainder of the day and investors will be waiting for tomorrow's Fed speaks.

Technical outlook

With today's sharp rise, the RSI indicator rose above 30 and is now marching toward 50, suggesting that bulls are taking control of the price action. Resistances for the pair align at 0.9810 (Aug. 28 high), 0.9900 (50-DMA/psychological level) and 1.0000 (parity). On the downside, supports could be seen at 0.9730 (200-DMA), 0.9650 (Aug. 31 low) and 0.9580 (Apr. 17 low).