The euro showed signs of weakness against the Swiss franc on Friday, as the weekend looms large via headlines in the Middle East.
EUR/CHF
The euro fell against the Swiss Franc during the trading session on Friday to break down below the 0.92 level. The German yields had dropped below 3% so that was part of the reason why the euro has fallen. That being said, this is a pair that I’m looking to buy on dips because the interest rate differential is still huge and of course, we have the Swiss National Bank on the sidelines here waiting to see whether or not they need to intervene.
Now, I don’t think we’re anywhere near the Swiss National Bank intervening, but it is something to keep in the back of your mind. The 50-day EMA sits at the 0.9180 level and I think that could be an initial area of interest. A drop and then a bounce, buying on the right-hand side of the V, is the situation that I’m looking for.
Strategic Investment and Consolidation Patterns
If the market were to turn around and test the 200-day EMA near the 0.9250 level, then we will have to ask questions about whether or not we have enough momentum. If we can break above there, then it’s likely that the euro truly takes off. I expect to see this happen sooner or later, but as things stand right now, things are still very noisy and you have to keep in the back of your mind.
I think of this more or less as an investment and a lot less of a trade and will add to this from time to time. I have been a buyer of this pair for several weeks and continue to see the fundamentals line up quite nicely for this. That being said, there are other currencies that you can play against the Swiss Franc that might yield more momentum such as the Australian dollar or even the New Zealand dollar.
Ultimately though, we are in consolidation after a huge shot higher. That’s typical of a market that’s trying to find a reason to continue to move in the same.