The European Union is facing problem with energy in the future, which is one problem, but the Swiss will backstop the euro if it crumbles.
EUR/CHF
The euro finds itself dancing around the 200-day EMA against the Swiss franc on Wednesday as we continue to see the interest rate differential play a big part in trading overall. The European Union of course is offering more in interest rates than the Swiss are, which is not a huge surprise, quite frankly. The Swiss have made it clear that they are watching interest rates and watching the FX markets for outsized moves in the franc that they may have to intervene against.
After all, they like the idea of a weak Swiss franc and with that being the case, I think you have to look at this as a market that continues to see a lot of choppy volatility. I think there are a couple of levels that you can pay close attention to.
Building Momentum in a Noisy Market
The first one of course is going to be the 0.92 level. That's an area that has attracted some attention as of late. But the other one might be the 0.9185 level because that is where the 50-day EMA currently resides.
With that being the case, I think you have to look at this as a market that continues to be noisy, but somewhat sideways. I think we're trying to build up some type of momentum here and in this environment, that might be difficult.
The Swiss National Bank offering 0% interest rates of course is doing everything it can to keep the value of the Swiss franc soft as they worry about the cost of exports into the European Union. On the other hand, the Europeans have to worry about energy, so there are quite a few problems there as well. Nonetheless, this looks like a market that is building the necessary pressure to eventually take off to the upside.