The Euro has been all over the place on Wednesday, as traders are looking to determine where risk is going now that a ceasefire has been declared in the Middle East.
EUR/CHF
The Euro initially has shown a lot of volatility during the trading session on Wednesday against the Swiss Franc as interest rates were all over the place with the announcement of a ceasefire. That being said, the 200-day EMA sits above, and it does in fact offer a little bit of resistance. If we can break above the 200-day EMA, it will free the market to go looking at the 0.93 level where I think it will end up eventually.
Given enough time, the interest rate differential will continue to pay you at the end of the day and therefore help the market move to the upside, but it’s worth noting that there is a lot of volatility out there driven by the war and the ceasefire. And now after the ceasefire, we keep hearing stories of minor attacks. It looks like somebody somewhere will make sure this doesn't last very long and that's something to keep in the back of your mind.
The Swiss National Bank and Long-Term Outlook
The other thing to really pay close attention to is the fact that the Swiss National Bank is likely to keep a little bit of pressure to the upside in this pair if it needs to as the appreciation of the Swiss Franc is a major problem for them. They have complained about it multiple times and it looks like they are in fact willing to get involved in the forex markets. Quite frankly, the way the 0.90 level held, it could have stealthily gone into the market in that environment; it would not be the first time the Swiss National Bank has done that.
Longer term, I like this pair, but that assumes that we go back to a normal regime when it comes to financial instruments. Until the war's done, we'll have to wait and see, but clearly the momentum is with the buyers at the moment, despite the fact that we are facing a couple of headwinds just above.