Currency News: After Years Of Nap, EUR/CHF Springs Up

Currency News

Currency News


After years of a nap, EUR/CHF woke up this week. Staging multi month highs and taking out the 1.1350 level in Asian session trade on 28th, July for the first time since its crash more than 2 years ago.

The weakness in the CHF is on fundamental factors. The market is coming to a realization that central banks policy difference is starting to kick into high gear. The European Central Bank (ECB) is clearly turning away from quantitative easing as growth in the region improves. And the Swiss National Bank (SNB) will remain firmly keeping its interest rates at -75bp for now.

German bonds rose, and the EUR/CHF pair is likely to rise with them. The pair still remains well below the 1.2000 ceiling. Which was set by the SNB in 2014. And, therefore, has plenty of upsides left, especially if growth in the Eurozone region accelerates.

The EUR/CHF is a crucial factor in the trading potential surrounding the Swiss Franc. The benchmark pair itself doesn’t present an outstanding trade opportunity. It is deeply influenced by the ECB’s efforts which are being heavily speculated upon. And the SNB has a history of lashing out on this pair, in particular, attempting to expand influence.

With the EUR/CHF starting to show greater volatility and even trend, there is more opportunity to see free and unique movement from Franc crosses like USD/CHFCHF/JPYCAD/CHF and GBP/CHF. These pairs have essentially traded as a mirror to its more liquid Euro counterparts (EUR/USD, EUR/CHF, EUR/CAD and EUR/GBP respectively). As the EUR/CHF continues to exhibit wider ranges and more significant volatility, the more unique movement you can find in the crosses.

After years of inactive price action, EUR/CHF could become an active pair again as macro players and short term specs become attracted to the new volatility, especially because it is thematically based rather than just a function of short term central bank manipulation.

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