The Euro continues to see selling against the Swiss franc, as the Swiss National Bank is also in the mix, threatening intervention.
EUR/CHF
The Euro fell against the Swiss franc during early trading on Tuesday to reach the 0.91 level. The 0.91 level, of course, is a large, round, psychologically significant figure, but it is also worth noting that we have turned around to show signs of life.
In fact, as things stand midday, it almost looks like we could form a hammer, and this is important due to the fact that it could end up being a reversal signal. Keep in mind that the Swiss National Bank is highly concerned about the strength of the Swiss franc and the biggest place that they see problems with would be against the Euro. The Euro represents the European Union and that is 85% of where Swiss exports end up.
A Potential Target to the Upside
The market rallying from here could send this market to the 0.92 level, which is an area of significant resistance. If we were to break above there, then it could change the trend overall. Ultimately, if this market starts to break down too drastically, the Swiss National Bank almost certainly will intervene and in fact has already threatened to do so a couple of times.
It is because of this that I would be very cautious about shorting this pair and recognize that if the Swiss lose their sense of humor, this might be the place to be if you are going to be a buyer. Central bank intervention does not happen that often, but one of the biggest culprits of it would be the Swiss and at this point, you have to be cognizant of just how dangerous it is to get short here and I think the market is starting to perhaps try to price that in on Tuesday.
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