EUR/CHF’s spectacular July and early August rise is imploding just as dramatically under the weight of de-risking flows linked to rising U.S.-North Korea tensions.
EUR/CHF’s July surge was fueled by buy stops above last year’s post-SNB 1.20 floor removal recovery high, the downtrend from 2013-14 peaks and the 200-WMA, the last of which now supports at 1.1230.
The North Korea news has revealed other fundamental flaws in the position and momentum-driven EUR/CHF surge to 1.1537, particularly badly lagging DEM-CHF yield spreads and furtherance of the DAX’s downtrend since June 19, a downtrend promoted by EUR’s outsized gains following the Macron win in April. EUR/CHF got Incredibly overbought before the current collapse.
If the 2016 peak and other supports by 1.12 don’t hold, 1.10 here we come.