The USDCHF is trading lower as part of broad-based Swiss Franc strengthening on the back of remarks by the SNB Chair Thomas Jordan. Jordan is commenting on CNBC regarding the rumours surrounding a possible intervention by the Swiss National Bank to weaken the Franc. A weaker Swiss Franc enhances the export attraction for Swiss goods.
Jordan says that the SNB does not intend to weaken the Franc for any advantage, but that he does not see a minimum exchange rate at the moment. Jordan also says that negative rates are a necessity, and reiterated that the SNB conducts its independent monetary policy that does not tag along with the ECB. He has also indicated that the SNB could cut rates if necessary and that the SNB can intervene as needed.
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Technical Outlook for EURCHF
Comments by ECB’s Christine Lagarde are starting to weigh on the Euro, especially as she has just said she prefers to have “higher growth than higher rates”. The markets have interpreted this to mean that any chance of rate hike is nowhere in the horizon. Broad-based strength in the Swiss Franc, therefore, provides a trading opportunity in the EURCHF.
The outlook shows that price has broken below the bearish flag on the daily and weekly charts, with a support level located at the 1.07127 area. A break of this support level targets 1.06152 in the first instance; this is where price lows of 20 June 2016 and 6 Feb 2017 are found. Further breaching of this support level to the downside targets a new support level at 1.04751 (neckline of April, May and June 2015 triple bottom pattern).
These are price levels corresponding to previous intraday pivot points of last week.
1.09544 offers itself as the immediate short-term resistance (yesterday’s highs), with 1.10196 being the next available resistance after that. 1.11648 is where the previous highs of Jan 2016, as well as the previous lows of Sep 2018 and April 2019, interact with the upper border of the bearish flag. These areas could be targeted by a sudden upswing in price, especially if there is even the slightest intervention from the SNB.