The EUR/CHF slipped lower this week to break below its current range, and may continue to retrace the advance from 3/12 as the European Central Bank holds a dovish policy stance however, as the Swiss National Bank pledges to put a floor on the exchange rate, expectations for another currency intervention should keep the pair within a broad range over the near-term.
Currency Pair: EUR/CHF
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The EUR/CHF slipped lower this week to break below its current range, and may continue to retrace the advance from 3/12 as the European Central Bank holds a dovish policy stance however, as the Swiss National Bank pledges to put a floor on the exchange rate, expectations for another currency intervention should keep the pair within a broad range over the near-term. After slipping to a low of 1.4299 in October, the euro-franc snapped back to reach a high of 1.5885 on 12/15, but the lack of momentum to retrace the sell-off from September is likely to hold the pair in the long-term down trend, and we may see the EUR/CHF fall lower over the near-term as market participants forecast the ECB to lower the benchmark interest rate by another 25bp next month. Over the next few hours of trading, we may see the euro-franc continue to push lower as equity futures continue to fall lower however, as the RSI approaches oversold territory, downside moves are likely to be capped, and we may see the pair attempt to push higher over the week to fill-in the gap from the 120 SMA. Nevertheless, as the SNB employs all of its available tools to mitigate the risks for deflation, the central bank may continue to stem the appreciation in the Swiss franc, and the extraordinary efforts may hold the pair within a broad range going forward as risk sentiment continues to drive price action in the foreign exchange market. Moreover, as the ECB Governing Council fails to meet on common ground, the lack of decisive action may continue to weigh on the euro, and as market sentiment falters, the Swiss franc may continue to push higher against its major counterparts as the low-yielding currency benefits from safe haven flows. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
To contact the author of this article, please email: dsong@fxcm.com
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