- The euro is stabilizing near the 200-day EMA against the Swiss franc, with central bank intervention risks limiting downside.
- Pullbacks are viewed as buying opportunities, while a breakout above resistance could trigger a longer-term move higher.
The Euro found itself to be a little bit positive during the trading session on Monday, as it looks like the market is just banging around the 200-day EMA. The 200-day EMA is an indicator that a lot of people will be paying close attention to, as it is often used to define the trend.
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There are a lot of things at play in this market right now that are worth watching. For example, the Swiss National Bank has gotten involved by suggesting it was only a matter of time before it would intervene if the Swiss franc kept gaining in strength. Since then, over the better part of the last three weeks, the euro has continued to go higher against the Swiss franc.
Swiss National Bank Influence and Key Levels
Ultimately, this is a market that, if it were to break down from here and perhaps even slip below the 50-day EMA, would likely present a nice buying opportunity. The 0.92 level seems to be a hard floor in this market, although the price is about 150 pips above there. It is something worth keeping in the back of the mind. If this market does start to break down, the Swiss will get involved, as this is the first place they look.
This is how they determine whether their currency is getting too strong or too weak, mainly due to the fact that 85% of their exports go into the European Union. Therefore, it is their biggest concern. The Swiss National Bank coming out and suggesting that they were monitoring the FX markets was actually code for saying that if traders continue to buy the Swiss franc, they will be punished. The Swiss National Bank is one of the quickest banks to do that.
If the market can turn around and break above the 0.94 level, it will challenge the 0.9450 level and then ultimately break out. That is believed to be what happens longer term, unless there is some type of massive geopolitical event.
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