The Euro has risen a bit against the Swiss franc on Wednesday, as the interest rate differentials continue to favor the upside.
EURCHF
The Euro has been very noisy during trading on Wednesday against the Swiss franc as risk appetite continues to be a very fluid situation. Ultimately, we need to look at this as a barometer for how most markets are essentially feeling, with the idea being that the Swiss franc of course is the natural safety currency for most traders to run towards if there is an issue.
That being said, there are some things going on in the world right now that are definitely influencing how this pair moves. The first one of course would be the war in the Middle East. As long as war continues to be a major concern, the Swiss franc is at least somewhat intriguing for traders to get involved with.
That being said, it is probably worth noting that the Swiss National Bank is willing to step in and get involved if the Swiss franc does in fact appreciate too strongly. In fact, they have explicitly said that. So with that being the case, I would be cautious about getting too aggressive at this point. I recognize that shorting this pair in some type of panic is probably going to be one of your more dangerous moves.
The 0.92 level looks as if it is offering a bit of support, and it is also the scene of the 50% Fibonacci retracement level, and we are sitting just below the 61.8% Fibonacci retracement level from the plunge that started at the end of last year.
Central Bank Intervention and Technical Indicators
The 200-day EMA currently sits at the 0.9242 level and breaking that of course would be a pretty big victory for those who are bullish. We will just have to wait and see how this plays out, but I do think we are in a scenario where traders will continue to watch the bond markets more than anything else as they seem to be driving everything.
Bond yields have risen as of late and that certainly helps the Euro over the franc as the Swiss National Bank is very quick to return to 0 and defend any attempts to drive rates higher in that country. The Swiss franc being weak is something that they desire at the minute, and I think that continues to be how you have to look at this.
I have no interest in getting too cute here. I recognize that buying on the dip is probably the best way going forward to play how dovish the Swiss National Bank is and of course the fact that the interest rate differential pays you.