The Euro initially tried to rally against the Swiss franc on Friday, but gave back gains as the risk appetite of not only does it show you just how soft the Euro is, it also shows you risk appetite in general. Beyond that, it shows you just how concerned people may or may not be about the Swiss National Bank.
Remember, the SNB is known for getting involved in the currency markets if the Swiss franc gets a bit too strong. It looks a lot like they have given up when it comes to Europe, because the European Union is in for a very tough winter. The Swiss have endured massive losses the years trying to pay this currency pair, most notably at the 1.20 level. When they finally gave up on the peg, it’s in the FX markets into a tizzy.
Waiting for a SNB Intervention
- Looking at this chart, we ended up forming a bit of a shooting star right at the 50 Day EMA, which is a technical signal that a lot of people will pay close attention to.
- Furthermore, it also was just below the 0.99 level, so I think that in and of itself might attract a certain amount of attention as well.
- In fact, this ended up being much like a “gravestone doji” candlestick, something you don’t see as often as a shooting star. If we break down below it, then one would have to think that we are going to continue going lower, perhaps back down to the lows near the 0.95 level.
Alternatively, we break above the top of this candlestick it may open the possibility of an attempt to get back to the 200 Day EMA, somewhere right around the 1.01 level. That’s obviously a much more difficult move to make, but it does potentially set up that type of trade. We would need to see the EUR/CHF gain strength as well, something that will be short-lived at best. Regardless, this trend is horrible, and there’s no need to try to fight and be the hero here. The only way this market turns around in this environment is if the Swiss themselves intervene and start buying Euros, something that they have done in the past to keep their currency somewhat competitive.
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