The Euro against the Swiss Franc is a market that I am watching closely at the moment, as the Swiss National Bank could intervene.
EUR/CHF
The Euro against the Swiss Franc is a pair that I'm watching very closely as we are at extreme lows and we have recently seen the Swiss National Bank complain about the strength of the Swiss Franc. This is ground zero for where they will make that decision because 85% or so of exports from Switzerland end up in the European Union, so this is very important to them.
We do see a lot of support in this area and while the Swiss National Bank has been quietly supporting the market, it has drifted a little bit lower. The question now is whether or not the Swiss will get involved.
The Potential for Central Bank Intervention
I certainly would not short this pair and if we can break above the 0.9250 level, then I think we've got a shot at heading back into this consolidation region. If this pair drops too much, then the Swiss almost certainly will act.
They are somewhat patient, but they do tend to come into the market with a bazooka, and you will see the Swiss National Bank come in and systematically destroy Swiss Franc strength against major currency pairs, not just the Euro. A lot of times it's almost like a domino effect. You see the Euro Swiss jump first and then the Dollar Swiss followed by the Pound Swiss, etcetera.
I think this is a situation where we are getting kind of close to some type of action and therefore, I'm watching that 0.9250 level for a potential entry. Again, I wouldn't short this pair just because you could find yourself 600 pips down in your trade almost instantly. They've been known to do that and have done it multiple times throughout my career.
Ready to trade our daily forex forecast? Here are the best online trading platforms in Switzerland to choose from.