It’s spelled tou·ché. It’s French, and isused to acknowledge a hit in fencing or the success or appropriateness of an argument, an accusation, or a witty point.
It’s typically used in the context of a conversation between two or more participants, acknowledging the acceptance of one’s reply, usually from one person to another person who is replying to said person.
Example:
Person 1: Hey man, did you hear the author of Catcher in the Rye passed away?
I am so happy I am not the only one to get these kinds of things mixed up in my head. It reminds me when I argued with my 3rd grade teacher about the spelling of a word. I must have spent 10 minuets trying to convince her that it was spelt necked.
It’s not really just for a great point or a witty remark. It’s one that strikes you—touches you like the point of the opponent’s fencing foil. You’re acknowledging that you have taken a hit. It says “You got me with that one.” “You stung me.” “Ouch.”
I can’t agree with @baxter‘s example; that doesn’t cost Person 1 anything. It’s just applause. When somebody makes a snappy comeback of the kind that sitcoms seem to depend on for laughs, the person who just got nailed would be the one to say “touché.”