EUR/CHF Forecast: Continues to Fall – 21 September 2022

The Euro looks rather negative across the board, and the Swiss franc is quite often used as a measuring stick for the Euro. That being said, if we do break down below the hammer from last week, it might start to put even more extraordinarily nasty pressure. Ultimately, anytime we rally I think there are plenty of sellers out there willing to get involved as the European Union continues to see a lot of noisy trading and inflationary concerns. This is a market that I think continues to see a lot of momentum, but we need to be very cautious as the market is a little different than other Euro related markets, as the Swiss National Bank is part of the equation.

The SNB has not said much lately, but they have had a long history of jumping into the market and shorting the Swiss franc. The market is likely to continue to worry about that, but there’s also the possibility that the Swiss have absolutely no chance of fighting the significant market forces out there. This is not like when they kept the peg of 1.20 against the Euro, because there is a war on the continent, and quite frankly the European Union is a bug looking for a windshield, and I think it’s going to find that windshield fairly soon. The Swiss can do almost nothing to keep their currency from appreciating drastically against the Euro.

The 50-Day EMA sits below the 0.98 level and is dropping. That should be a significant barrier to overcome, and if we did then we could see a big reversal towards the parity level. I don’t think that’s going to be likely, so therefore rallies offer opportunities to get short again. The size of the candlestick is relatively impressive as well, and it is worth noting that we have been in a strong downtrend. I think that continues to be the case but if we start to fall apart too quickly, then the SNB could step in for a temporary floor.

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