The SNB finds itself having to dip a toe in the water to protect the 1.2000 peg today, if the rumors are true, with bids rumored at the 1.2030 level in the cross.
Given the improved tone in the European sovereign debt crisis in the last month, one would have expected the Swiss franc to lose some of its safe-haven status. Even tensions with Iran have ratcheted down a notch or two lately, making the case for a strong franc somewhat less compelling.
Despite all that, we sit within a whisker of the line in the sand drawn by the Swiss last September.
The one thing we’ve learned over the years of market watching is that Mr. Market loves nothing more than a challenge. Tell him, “don’t touch that, it might hurt”, reflexively takes a poke at the untouchable.
1.2000 is the untouchable level, with barriers and stops below that level. If you tell the need to buy dips, do not leave s top just below 1.2000. You are begging to be stopped out if you do. Better to leave a buy order below that level with a stop below 1.1950, rather than try to buy just above 1.2000 with a tight stop, in my view.
