The EUR/CHF pair initially fell during the course of the session on Monday, testing the 1.08 handle. That being the case, the market bounced enough to form a hammer, and that of course looks like it’s ready to go higher. Using the 1.08 level as support makes complete sense, simply because the area offered so much resistance previously. With that being the case, the market should head towards the next major level, which I see as the 1.10 handle. With this, this is one of my favorite pairs at the moment. After all, there’s very little out there to get excited about in the middle of the summer, especially as we certainly head towards the middle of the vacation season at this moment in time. With that, the liquidity just isn’t there, but there is one major and large player involved at the moment, the Swiss National Bank.
Swiss National Bank
The Swiss National Bank has been working against the value of the Swiss franc lately, especially against the Euro. With that, the market should continue to be well supported and at this point in time I don’t really see any opportunity to fight that central bank. Recently, the Bank released their balance statement, and it showed that they had been quietly working the Forex markets. This is the perfect time of year to do so, because of the liquidity issues that are inherently foundering this time year.
On top of that, the Swiss of course have been struggling due to the ultra-strong Swiss franc, as they have most of their trading done between them and the European Union, so having said that it makes sense they will continue to go into the market. I believe that we will eventually head to the 1.20 level given enough time, completely wiping out the meltdown. On top of that, you have to look at the GBP/CHF pair, which is somewhat similar. It’s already just about taking out all of that move. I think this pair will eventually do the same. I am very bullish of the EUR/CHF pair going forward.
