EUR/CHF has recently turned back from an upward trajectory over the past couple of days within its broad range of approximately 0.9700-1.0101. Economists at Credit Suisse expect to witness further weakness in EUR/CHF due to a renewed phase of risk-off, as weekly MACD momentum is turning freshly lower back into negative territory. Alongside a risk-off stance, this movement creates a bias towards further CHF appreciation.
The economists believe that a range breakdown below 0.9712/00 is likely to occur due course, which would then introduce a move to 0.9559 next and potentially bring the EUR/CHF to a low of 0.9411. Key resistance is expected to be found at the range top of 1.0101, and this is anticipated to cap further trading trends. The current economic climate and market conditions seem to be reflective of this trend, which lends further credibility to the Credit Suisse analysis.
It is crucial to recognize that these trends in the currency market are influenced by a variety of factors, including geopolitical events, economic policies, market sentiment, and domestic developments in the respective economies. As a result, traders and investors are advised to stay informed about relevant events, data releases, and global economic developments that may impact the EUR/CHF trading pair.
For instance, the ongoing geopolitical tensions between Russia and Ukraine, as well as the conflict in the Middle East, might contribute to mounting risk aversion among market participants, which would result in more capital being poured into “safe-haven” assets such as the Swiss franc (CHF). In this case, the CHF is likely to appreciate against the Euro (EUR), pushing the EUR/CHF pair even lower.
Another interesting development to watch is the recent move by the Swiss National Bank (SNB) to employ more non-traditional monetary policy tools, such as negative interest rates and currency interventions. This move is primarily aimed at preventing the CHF from appreciating too much, which would put further strain on the already struggling Swiss economy. If the SNB’s measures prove successful, the CHF could be preemptively capped, and the EUR/CHF could potentially avoid the predicted downtrend.
Furthermore, the ongoing negotiations between the European Union and the United Kingdom on their post-Brexit relationship could also significantly impact the EUR/CHF pair. Depending on the outcome, the euro could see a significant appreciation or depreciation in value, which would then impact its trading relationship with the Swiss franc as well.
Additionally, economic developments within Europe – such as the European Central Bank’s (ECB) monetary policy stance, the prospect of further fiscal stimulus measures, or the ongoing economic recovery from the COVID-19 pandemic – can lead to fluctuations in the EUR/CHF pair. For example, if the ECB were to announce a more hawkish approach to interest rates, the euro could appreciate in value, and the EUR/CHF could defy expectations by assuming a more positive trend.
In conclusion, despite the recent downturn experienced in the EUR/CHF pair, it is essential for traders and investors to stay vigilant about economic developments and global events that could influence the currency market. Depending on the outcome of these events and decisions, the EUR/CHF could either continue down the anticipated path or potentially defy expectations and assume a more positive trajectory. Remaining informed and regularly monitoring the situation is crucial for those involved in the currency market to make well-informed decisions and effectively manage their risk.