- The Euro rallied slightly in early Tuesday trading, as we have seen multiple days in a row.
EURCHF
But having said that, you also have to keep in mind that the previous three sessions have seen a certain amount of downward pressure against the Swiss Franc as well. We essentially seem stuck at the 0.93 level, which is an area that obviously is a large, round, psychologically significant figure, but it also features the 50-day EMA. It is worth noting that this pair has been very sideways since the beginning of April.
SNB Attention
And it is also perhaps more important to realize that this pair is what the Swiss National Bank pays the most attention to. Recently, they had suggested that they were watching Forex moves very closely, which is code for the possible intervention by the Swiss National Bank to bring down the strength of the Swiss Franc.
This is the pair they watch the most because over 80% of Swiss exports end up in the European Union, and therefore, you have to be cognizant of the fact that it is very detrimental to the Swiss economy if suddenly people cannot afford Swiss products in other countries.
All things being equal, this is a range-bound market, and I do believe that there is a hard floor at the 0.92 level. I also recognize that we need to close above the 50-day EMA on a daily close to get truly bullish. And I think also that it is very possible that we could just go sideways for a while.
The reason I bring this chart to your attention is that if it starts to sell off rapidly, you will see the Swiss National Bank intervene in this pair and many others to sell off the Swiss Franc, meaning that it could open up opportunities to buy US dollars, British pounds, etc., against the Swiss Franc, not just the Euro. So, while we are not, I believe, at an intervention level yet, I am watching this pair closely.
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