Source: ForexYard
It has been a while since I’ve touched on the EUR/CHF as the SNB has done a good job of holding the floor at 1.20. However, today the pair has tested and failed to break above its long term falling trend line which puts the ball back in the court of the SNB to continue to weaken the CHF.
Wednesday’s have typically been good for the EUR/CHF as a weekly SNB meeting leads to speculation of further policy moves by the Swiss National Bank. When the end result is nothing but market rumors the Swiss franc will often strengthen on Thursdays. This is the case today with the EUR/CHF down 200 pips. With a lack of stabilization in the euro zone and a respite in the defense of the Swiss franc by the SNB, the risk is increasing for speculators to begin to test the resolve of the SNB to hold the 1.20 line in the sand.
Should additional downward pressure be felt then the pair could test the supports of 1.2210 from the mid-September and October lows and the key 1.2000 level, setting up a showdown between speculators and the SNB.
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