USD/CHF drops to 1-week lows, below mid-0.9500s ahead of US PPI

   •  On offers for the third consecutive session amid subdued USD demand.
   •  Risk-on mood does little to influence CHF’s safe-haven appeal and lend support.
   •  Traders now look forward to the latest PPI print for some fresh impetus.

After an initial uptick to 0.9580 area, the USD/CHF pair met with some fresh supply and is currently trading in negative territory for the third consecutive session. 

The pair extended its post-NFP retracement from 2-1/2 month lows and has now dropped to a one-week low, below mid-0.9500s amid subdued US Dollar demand. 

With markets looking past early optimism, led by comments by Chinese President Xi Jinping, news reports that there is a stall in US-China talks from last week prompted some fresh USD selling and was seen as one of the key factors behind the pair's intraday slide. 

However, a fresh wave of global risk-on trade, as depicted by strong gains in equity markets and which tends to dent the Swiss Franc's safe-haven appeal, might now help limit further downside, at least for the time being.

Traders now look forward to the US economic docket, highlighting the release of PPI print, which might provide some short-term impetus ahead of Wednesday's consumer inflation figures and the latest FOMC meeting minutes.

Technical levels to watch

Immediate support is pegged near the 0.9525-20 region, below which the pair is likely to break below the key 0.9500 psychological mark and head towards testing 0.9460-55 support area.

On the upside, any meaningful recovery attempt beyond 0.9565 level now seems to confront strong resistance near the 0.9600 handle, which if cleared might accelerate the up-move towards the very important 200-day SMA hurdle near the 0.9655 region.