Given the environment we are in, the Swiss franc strengthening probably wasn’t what you expected. Now, we could have an opportunity.
EUR/CHF
The Euro has fallen against the Swiss franc during trading on Wednesday as interest rates around the world had dropped a bit due to the idea that there might be peace in the war. If that's going to be the case, that could throw things into disarray a little bit.
Eventually I do think that the Euro wins out because quite frankly, the interest rate differential favors it. And of course, we've had a nice run to the upside. We tested the 200-day EMA and have pulled back rather significantly. So that makes quite a bit of sense that a technical move occurred.
Interest Rate Differentials and Technical Support
We are trying to recover the 0.92 level, and I do find it interesting that we are in fact bouncing above it as I speak. Given enough time, I think we will challenge the 200-day EMA again and then eventually go looking to the 0.93 level.
I do not like the idea of shorting this pair and we are testing an area that has been both support and resistance previously and, in this environment, I think that is one of the most important things you can pay attention to is whether or not these levels hold. I don't think it's going to be easy for the Euro to break above the 200-day EMA but eventually it will.
The interest rate differential will pay you along the way and the European Central Bank may be forced to keep its interest rates higher, and the Swiss of course have flat out said they are keeping theirs at 0. With that being said, I think you've got a situation where you are just simply looking for an entry opportunity, and you may have seen that during the session here on Wednesday. I remain bullish but I also am patient with this. I realize it's going to take some time.
Potential signal: I am a buyer here. I am setting a stop at 0.9155 below. Aiming for 200 pips or more….interest rates will pay you at the end of every day.