USD/CHF retreats from multi month highs, trades below parity ahead of PMI data

• US Dollar Index struggles to break above 96.
• 10-year T-bond yield erases gains to weigh on the greenback.
• Coming up: ISM and Markit non-manufacturing PMI data from the U.S.

The USD/CHF extended its rally into the fourth day on Tuesday and reached its highest level since early November at 1.0020 during the European session before starting to retrace its daily advance. As of writing, the pair was still up 0.18% on the day at 0.9996.

The broad-based USD strength today drove the pair higher. The US Dollar Index, which gauges the USD's value against a basket of six major currencies, rose to 96. However, with the 10-year T-bond yield erasing its daily gains in the last hour, the greenback lost some strength and the DXY, as of writing, was clinging to small gains near 95.90. Later in the session, the IHS Markit and the ISM will be both releasing their non-manufacturing PMI figures.

Meanwhile, the S&P 500 futures is adding 0.22% on the day, suggesting that Wall Street is likely to open the day in the positive territory. Positive market sentiment in the NA session could cause the pair to, once again, gain traction.

Technical levels to consider

With a daily close above 1.0000 (parity/psychological level) the pair could target 1.0085 (Nov. 16, 2018, high) on the upside ahead of 1.0130 (Nov. 13, 2018, high). On the other hand, supports align at 0.9980 (daily low), 0.9935 (20-DMA) and 0.9900 (psychological leve/50-DMA). In the meantime, the RSI indicator on the daily chart continues to climb higher toward the 70 mark, suggesting that the pair has more to gain before becoming technically overbought.