USD/CHF rebounds from 8-week lows and points to further gains

• Short-term outlook now favors an extension of the correction in USD/CHF after a strong bounce. 
• Despite falling against US Dollar, Swiss franc gains momentum against its European rivals. 

The USD/CHF dropped earlier today to 0.9862, the lowest level since October 16 and then rebounded sharply, amid a rally of the US dollar following US data and on the back of ongoing concerns about Brexit and the Italian budget drama. 

The price rose back above 0.9900 and climbed to 0.9921, hitting the highest level since Friday. It was holding near the top, with the bullish tone intact. The greenback reversed after the release of higher-than-expected PPI numbers for November. 

The Swiss franc remains supported amid Brexit concerns and also after the Italian finance minister Tria said that the government won't make major changes to the budget. His comments renewed concerns over Italy's budget conflict with the European Commission.

USD/CHF Levels to watch 

The pair has risen back above the critical 20-SMA in the four-hour chart that is turning to the upside. If the US dollar holds above 0.9900 the short-term, the technical outlook will remain bullish. Currently is testing the 0.9920, above the next resistance levels might be seen at 0.9940 and 0.9955. On the flip side, the immediate support now is the 0.9900 area, followed by 0.9875 and 0.9860 (Dec 11 low).