EUR/CHF climbs to five-month high as franc continues to hold weaker post-Easter

Technical Analysis

Author: Justin Low | eurchf

EUR/CHF moves above 1.1440 for the first time since 8 November

EUR/CHF D1 23-04
ForexLive
The way that EUR/CHF has rebounded since testing support just under 1.1200 would definitely put a smile on SNB head Thomas Jordan's face. The pair has now climbed to its highest level since 8 November as the franc continues to stay weaker, aided by some commentary by Jordan himself two weeks ago here.

That said, the move higher here is hardly anything to shout about as the pair remains rather confined in a narrow range between levels just under 1.1200 and the 1.1500 handle since mid-August last year.

The fundamentals of the franc hasn't really changed over the past year but technically, price momentum is now more bullish after breaking above both key daily moving averages. That could result in a move to test the 1.1500 level in the coming sessions should buyers be able to find enough conviction on such a move, if it is also supported by fundamental factors i.e. risk sentiment of course.

In that light, earnings season in Wall Street this week will be key in dictating near-term direction in the pair. But all else being equal, the recent development would be good news for the SNB as it minimises the need for them to intervene in the market.

As for trading direction, I would argue it would be tough to try and catch a move higher from here if you didn't ride the bounce off 1.1200 at the start of the month. I reckon a break above 1.1500 could open up an extension to the topside but there isn't much reason for that currently apart from the SNB wanting the currency pair to head towards those levels. However, they don't seem too keen themselves to be intervening at current levels to ensure that happens so there goes your potential tailwind.

If anything, a small short closer to 1.1500 could be a better trade to consider in the coming sessions especially if global developments favour such conditions i.e. trade conflict drags on, global growth conditions stay sluggish, Eurozone data disappoints.

But as mentioned above, if price firmly clears 1.1500, it's hard to argue against a technical break like that if and when it does happen.

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