EUR/CHF Price Analysis & News
- Euro Remains Firm Despite Inflation Scare, Euro Area Reopening Underpins
- EUR/CHF at a Discount vs Stoxx Banking Index and German 10Y Yield
- SNB Increasing Active in FX Again
Euro Remains Firm Despite Inflation Scare, Euro Area Reopening Underpins
In the face of US data, particularly the sizeable beat on inflation, the Euro has held up relatively well to trade in the mid-1.21s. That said, optimism over the economic recovery in the Euro Area has been rising in recent weeks as regions begin to ease lockdown measures, which is expected to be highlighted in this week’s flash PMIs. In turn, as markets begin to price in a possible tapering of the rate of PEPP purchases, risks remain tilted to further upside for the Euro, particularly against safe-havens such as the Swiss Franc. The charts below also highlight that EUR/CHF is trading at discount relative to the Stoxx Banking Index and Bund yields, which in the past have been a good indicator for the pair. As such, as focus grows on the ECB’s June meeting, I am bullish on the pair. Reminder to keep a close eye on ECB speakers ahead of the meeting, which can shape expectations.
EUR/CHF at a Discount vs Stoxx Banking Index and German 10Y Yield
Source: Refinitiv
SNB Increasingly Active in FX Again
To add to this, the SNB appears to be stepping up its FX intervention with SNB sight deposits seeing a notable increase over the past two weeks (largest intervention since August 2020), which in turn may bode well for EUR/CHF bulls.
THE SETUP: On the technical front, key support remains at 1.0875-90, protecting the 200DMA at 1.0856 and thus should the pair close below the 200DMA, this will negate the upside view. That said, near term resistance resides at 1.0985, marking the high last week, while a break of the psychological 1.10 handle will likely open the doors towards 1.1050-75. Longer term bullish view is for a return to 1.12.
EUR/CHF Chart: Daily Time Frame
Source: Refinitiv
| Change in | Longs | Shorts | OI |
| Daily | -9% | -12% | -10% |
| Weekly | -10% | 18% | -2% |
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