The drop in risk appetite pushed the EUR/CHF lower during the previous day and the pair may continue to trend lower as market sentiment wanes however, as the Swiss National Bank attempts to put a floor on the exchange rate in an effort to stem the risks for deflation, speculation for a currency-intervention could lead the pair higher over the week.
[B]Currency Pair:[/B] EUR/CHF
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias: [/B]Flat
[B][U]Analysis[/U][/B]
The drop in risk appetite pushed the EUR/CHF lower during the previous day and the pair may continue to trend lower as market sentiment wanes however, as the Swiss National Bank attempts to put a floor on the exchange rate in an effort to stem the risks for deflation, speculation for a currency-intervention could lead the pair higher over the week. After slipping to a low of 1.4299 in October, the euro-franc bounced back to reach a high of 1.5885 on 12/15, but the lack of momentum to break back above 1.5270-80 (38.2% Fib) and the 200-Day moving average is likely to hold the pair within range as investors weigh the outlook for future policy. At the same time, as the European Central Bank puts a floor on the interest rate and maintains a dovish outlook for future prices, expectations for further easing is likely to weigh on the exchange rate as growth and inflation falter. Over the next few hours of trading, we may see the Swiss franc continue to benefit from safe-haven flows however, as the EUR/CHF approaches oversold territory, moves to the downside are likely to be capped, and we may see the pair push back above 1.5090-1.5100 (50.0% Fib) to fill-in the gap from the 120 SMA. Nevertheless, as the Swiss National Bank is widely expected to hold the benchmark interest rate at 0.25% later this week, comments from the central bank head are likely to spark volatility in the currency market, and the board may decide to expand its purchases of foreign currencies as the risks for deflation intensify. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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