The Euro rose a bit in the early part of the day against the Swiss franc on Wednesday. With this being the case, the markets are trying to price in the idea of SNB intervention, and possibly the pressure on the ECB to raise rates due to inflation via energy.
EUR/CHF
The Euro has rallied against the Swiss franc during the trading session on Wednesday, breaking the back of a shooting star that formed during the previous session. This is a bullish sign from a technical analysis standpoint, and it's probably worth mentioning that the safe haven surge, tensions in the Middle East more specifically than anything else, had triggered a massive flight to quality, propelling the Swiss franc towards a test of the 0.90 psychological floor, a level not seen since 2015.
That being said, there are concerns about the ECB being under pressure to consider rate hikes later this year to combat energy-driven inflation. Meanwhile, the Swiss National Bank is expected to hold rates at 0 tomorrow. Furthermore, the Swiss National Bank is possibly looking to intervene if the Swiss franc strengthens too much.
Technical Resistance and SNB Intervention Risk
The question at this point is whether or not we can break above the 0.91 level on a daily close. I'll be watching this very closely after the ECB meeting. If we turn around and fall from here, the 0.90 level should be a floor and quite frankly, sooner or later, the Swiss are going to lose their sense of humor about this.
They do have a history of intervening in the markets, and I think a lot of traders are starting to get nervous. While I'm not necessarily too keen on the Euro, the one thing that I do know is that a 0 interest rate is toxic for a currency eventually. If we get any type of good news out of the Middle East, this pair could fly. In that scenario, this could be a big winner over the longer-term.