Yesterday EUR/CHF reached a new high in the post-floor era at 1.1060. This confirms that the negative interest policy implemented by the SNB is starting to work. Despite the market turmoil and low risk appetite since the beginning of the year the franc only gained little traction. It seems that other currencies such as the Yen, the USD or the even the Euro are superior “safe haven” alternatives, all of which have performed better than the franc year to date.
Going forward we expect the franc to continue experiencing selling pressure, however should the ECB act in March, which is a real possibility according to last week’s meeting hints, the SNB might be obliged to follow suit.
Graphically the EURCHF broke out of its consolidation triangle and is now meeting resistance at around 1.1050. With and overbought signal on the RSI, the pair might be due for a short-term pullback before going higher with 1.12 in sight.
EURCHF: Buy @ b/w 1.0910 -50, Stop 1.0880, Target 1.12