USD/CHF breaks below 0.9600 mark, hits fresh monthly low amid risk-off/weaker USD

• A combination of factors dragged USD/CHF to a nearly one-month low on Tuesday.
• The risk-off mood underpinned the safe-haven CHF and exerted downward pressure.
• Broad-based USD weakness further contributed to the selling bias and the downfall.

The USD/CHF pair dropped to a nearly one-month low during the early North American session and is now looking to extend the downward trajectory below the 0.9600 round-figure mark.

The pair prolonged its recent sharp retracement slide from a two-year peak, around the 1.0065 region touched earlier this month and witnessed some follow-through selling on Tuesday. This marked the second successive day of a downfall - also the fifth in the previous six - and was sponsored by a combination of factors.

The worsening global economic outlook continued weighing on investors' sentiment, which was evident from a fresh wave of the risk-aversion trade. This, in turn, boosted demand for the traditional safe-haven Swiss franc and dragged the USD/CHF pair lower amid the emergence of heavy selling around the US dollar.

The anti-risk flow was reinforced by a fresh leg down in the US Treasury bond yields. Apart from this, strong pickup in the shared currency - bolstered by hawkish comments by the ECB policymakers - dragged the USD Index to a fresh monthly low. This was seen as another factor that contributed to the USD/CHF pair's decline.

On the economic data front, the US PMIs indicated a deceleration of growth in both - the manufacturing and services sector - and did little to provide any respite to the USD bulls. Tuesday's US economic docket also features New Home Sales and Richmond Manufacturing Index, though the focus remains on Fed Chair Jerome Powell's speech.

Technical levels to watch