USD/CHF stages sharp U-turn after climbing to 0.9200

• USD/CHF rose to its highest level in nearly a month at 0.9200.
• Risk aversion helps CHF erase its losses on Tuesday.
• US Dollar Index clings to daily gains above 93.00.

After closing the previous two trading days in the positive territory, the USD/CHF pair extended its rally and touched its highest level since August 12th at 0.9200. However, the dismal market mood provided a boost to the safe-haven CHF and forced the pair to erase a large portion of its daily gains. As of writing, USD/CHF was up 0.14% on the day at 0.9172.

Wall Street on track to open deep in negative territory

Heightened US-China geopolitical tensions and renewed concerns over a no-deal Brexit seems to be weighing on market sentiment on Tuesday. Reflecting the intense flight to safety, major European equity indexes are losing between 0.55% and 1.4% on a daily basis. Additionally, the S&P 500 futures are down nearly 1%, suggesting that major equity indexes in the US are likely to open the day with large losses.

On the other hand, the broad-based USD strength seems to be helping USD/CHF limit its downside for the time being. At the moment, the US Dollar Index (DXY) is up 0.26% on the day at 93.30 and is registering daily gains for the sixth straight day.

Later in the day, the IBD/TIPP Economic Optimism Index and Consumer Credit Change data will be featured in the US economic docket. Nevertheless, risk perception is likely to remain the primary driver of the market action. A sharp selloff in US stocks could make it difficult for the pair to regain its traction even if the DXY extends its daily rally during the American session.

Technical levels to watch for