The euro continues to see a lot of noise, as French debt issues are a main driver of the euro at this point in time. With some relief coming out of French debt markets, we have seen some resilience.
EUR/CHF
The euro has risen a bit against the Swiss franc during the trading session here on Tuesday, as French bond yields have cooled off a little bit and German bond yields still offer enough value against Swiss bond yields that EUR/CHF pays you at the end of every day.
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It is worth looking at this through the prism of a market that is hanging around the 0.93 level and, from a technical analysis standpoint, more importantly, the 200-day EMA.
We're squeezing between the 200-day EMA and the 50-day EMA indicators
We're squeezing between the 200-day EMA and the 50-day EMA indicators, and this typically means that we will have a jump sooner or later. It doesn't have to, but it does tend to squeeze the markets.
I prefer to get paid at the end of every session, not pay swap, so I am positive on the euro against the Swiss franc, although I'm the first person to state that if I am buying something against the Swiss franc, it probably would not be my first choice using the euro.
Longer term, though, we could have serious value here, and you need to watch the French bonds to see how they are behaving. If you start to see those yields drop, that means that maybe bondholders are a little bit more comfortable giving money to the French and, therefore, there is less fiscal risk.
In that environment, I would anticipate the opposite of what you probably expect to happen: the euro rises. I'll be watching very closely. This could end up being a nice buying opportunity. We certainly have held stable here over the last week or so, and because of that, this is an interesting market to me.
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