- The euro shows early strength against the Swiss franc after a brief dip, holding above the 50-day EMA while the 0.92 level remains a critical floor.
- Policy preferences and rate differentials continue to support a gradual bullish shift.
The euro initially dipped slightly against the Swiss franc during trading on Friday but has turned around to show signs of life. As the market is sitting just above the 50-day EMA, it is worth noting that there is at least one technically bullish signal. That being said, the most important thing to pay attention to is the 0.92 level as a major floor in the market.
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The 0.92 level is a large, round, psychologically significant figure, and this is a market that will continue to watch that very closely. The Swiss National Bank has made it clear that they have lost their sense of humor with the Swiss franc's strength and the issues that it can cause in trade.
If the market were to break above the 0.9350 level, then it opens up the possibility of a move to the 200-day EMA, which is sitting at the 0.9350 level. Anything above there would confirm a complete turnaround in the trend. At this point, short-term pullbacks offer buying opportunities, and those buying opportunities continue to attract a lot of attention.
Remember that the interest rate differential does, in fact, favor Europe over Switzerland, and with the Swiss looking to do everything they can to keep the value of the franc reasonable as their exports—at least 85% of them—flow into the European Union, it makes sense that they will defend this area. I do expect choppy behavior, but overall, I anticipate that sooner or later this market turns around and shows signs of strength.
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