SNB head Thomas Jordan tried to jawbone the swissie yesterday, but instead inspired further buying in the currency
Jordan said that the SNB is "ready to intervene in the FX markets if necessary" in Davos yesterday, and the market duly replied by daring him to do so.
The swissie was the top performer in yesterday's trading despite the euro getting a pop post-Draghi presser.
Looking at EUR/CHF, it was quite a volatile day for the pair - which doesn't happen too often. The pair gyrated between 1.1630 to 1.1740 in the midst of all the action, and ended the day around 1.1670.
Sellers managed to take the pair lower breaking below the upward trendline formed since August last year. Near-term, sellers still remain in control but buyers are holding on at the 100-day MA for the time being.
While the SNB hasn't been actively intervening as they had before when they removed the EUR/CHF floor, I don't think they'd be too happy to let the pair fall back to the mid-1.10 levels. For now, risk can be define and limited at the 100-day MA for buyers - and I've been clear on my position for the pair since it was trading at 1.1300 last year.
The SNB will act after the ECB acts, and they will continue to intervene and/or jawbone the currency if they see the need to if the pair falls too much (CHF strengthens). But a retracement here is something to be wary of for buyers. The pair has been on a solid uptrend from late April last year with some minor retracements along the way, so it shows which side the pain trade is on.
In any case, this is where technical levels come in so you can limit your risk exposure.
