USD/CHF drops below 0.9730 after KOF Leading Indicator improves to 96.4

• Switzerland's KOF Leading Indicator in December rose to 96.4 from 92.6.
• US Dollar Index extends slide following Friday's sharp drop.
• Major European equity indexes pare early gains to turn red.

The USD/CHF pair lost more than 50 pips on Friday and started the new week on the back foot. After touching its lowest level in more than four months at 0.9718 earlier in the session, the pair staged a technical rebound but struggled to push higher after the upbeat data from Switzerland helped the CHF gather strength. As of writing, the pair was down 0.2% on the day at 0.9728.

Signs of life in Swiss economy

KOF Leading Indicator, the gauge of Switzerland's expected economic performance in the next six months, rose to 96.4 in December from 92.6 in November to beat the market expectation of 94.5. 

In the meantime, The US Dollar Index dropped below the 97 mark on Monday to reflect the ongoing selling pressure on the greenback. Ahead of Pending Home Sales, Goods Trade Balance and Dallas Fed Manufacturing Index data from the US, the index is down 0.2% on the day at 97.82.

Despite the broad USD weakness and the inspiring KOF data, modest losses witnessed in major European equity indexes point out to a lack of risk-appetite ahead of the new year and helps the pair limit its losses for the time being.

Technical levels to watch for