The Euro rallied again during the Friday trading, as we continue to see a lot of interest rate traders getting involved in anything they can against the Franc. Expect buyers on dips from what I see.
EUR/CHF
The Euro rallied again during the trading session on Friday against the Swiss franc to touch the 0.92 level. The 0.92 level is a large, round, psychologically significant figure and an area that had previously been supported, so now a little bit of market memory comes into the picture where the previous support now becomes resistant.
The question of course is going to be whether or not the market will continue to favor the interest rate differential by purchasing the Euro over the franc or do we have to pull back a bit? It is worth noting that the market has given back about half the gains for the day so maybe a pullback is somewhat imminent.
Support Levels and Central Bank Intervention
The Swiss National Bank is likely to get involved if the Swiss franc appreciates too quickly but short-term pullbacks at this point, we could see the 50-day EMA open up as support underneath and then the 0.91 level offering a floor as well. Clearing the 0.9220 level is likely that the market could go looking to the 0.93 level, but it will have to deal with the 200-day EMA in the 0.9253 area.
Ultimately the interest rate differential continues to favor the Euro, and I do think that the Swiss threatening to intervene will put a floor in this market. I look at pullbacks at this point in time as a potential buying opportunity and I do remain bullish about this pair, but I also recognize that there will be a lot of order flow to chew through on the way back up.