EUR/CHF analysis

• I have recognize that the euro continues to see strength overall.
• We initially pulled back to the 50-Day EMA against the Swiss franc, only to turn around and show signs of life.
• Now that we are testing the 0.97 range, I think if we can break above here, we could see a lot of buyers come in and push the euro much higher against the Swiss franc.

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Keep in mind that the Swiss National Bank was the first major central bank to cut rates, and although the European Central Bank has followed right along, the reality is that the Swiss franc itself is being taken down in value against most currencies, not just the EUR/CHF exchange rate. In general, I think this is a market that continues to see a lot of upward pressure and it is probably only a matter of time before we try to get back to the 0.99 level. However, this is a pair that tends to be very choppy and therefore it would not surprise me at all to see this market take quite a bit of time to get to where we are going.

If we do pull back from here, the 200-Day EMA could come into the picture near the 0.9650 level. Breaking down below there opens up the possibility of the 0.96 level offering support as well. In general, I like the idea that hanging onto this pair due to the fact that you get paid to hang onto it at the end of each day. Recently, especially as we head into the middle of summer, I have preferred carry trading, and other words collecting swap at the end of every day because it does tend to work out over the longer term. It also simplifies the entire process.

Swiss Franc

I believe the Swiss franc is going to continue to struggle, simply due to the fact that people are starving for any type of interest return. Furthermore, it’s worth noting that bonds are starting to offer more interest as well, so I believe the currency such as the Euro, US dollar, and British pound will all do quite well against the CHF over the next several weeks, if not months.

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