The euro continues to see choppy action against the Swiss franc, as traders try to determine the next move in interest rate differential, as well as the “war premium” being priced in the markets.
EUR/CHF
The euro continues to be very noisy against the Swiss franc, but this is a chart that I’m watching very closely because the area right around 0.9250 features the 200-day EMA and a lot of algorithmic and technically driven traders will be watching to see if we can overcome this area. Furthermore, it happens to be the 61.8% Fibonacci retracement level from the drop in early December.
Interest rate differential continues to favor the euro and that is part of what’s going on here, but at the same time, we also have the Swiss National Bank very loudly saying they will intervene if the Swiss franc gets too strong. Since they’ve started saying that we have seen this market rally, about 225 pips. All things being equal, you get paid to hang onto this pair and I think that is something worth watching very closely.
Risk Appetite and Support
Ultimately, this market I believe will continue to be one that you look to buy dips in as long as risk appetite stays relatively stable. You get paid at the end of every day to hold this pair, so that helps buffer any short-term pullbacks and I do believe that eventually, once we break above the 200-day EMA, we may have a real shot at the 0.93 level.
An area that previously was a major gap lower at the open of the week back in January. This market is one that is fairly slow-moving most of the time, so you will have to be somewhat cautious. But right now, this is one of my favorite pairs to buy dips in and simply build a larger position.