EUR/CHF Forecast: Risk Sentiment Supports Upside Bias

• During the trading session on Monday, we have seen the euro rally fairly significantly against the Swiss franc, as we continue to bounce around in the same range that we had been in previously.
• Because of this, I think you’ve got a situation where traders are going to be paying close attention to this range, not only from a technical standpoint, but also from a risk appetite standpoint.

Technical Analysis and Risk Appetite

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The person you need to know about the EUR/CHF pair is that it is in fact a common gauge for traders to look at through the prism of risk appetite. After all, the Swiss franc is a safety currency in the highest order. Europeans will typically start buying things in Switzerland to protect their wealth one times are tough. On the other hand, if times are fairly good as far as risk appetite is concerned, traders will pile into the European Union and other places that are cold anything but “Switzerland”, and therefore it does make a certain amount of sense that we will be watching this very closely.

The technical set up in this market is very range bound, but it does look like it is slowly “squeezing” higher, with the 50 Day EMA sitting right in the middle of the candlestick for not only the trading session on Monday, but also the trading session on Friday. The 200 Day EMA sits at the 0.9420 region, and I think if we can break above there, then the Euro may truly take off against the Swiss franc.

I do expect a lot of volatility and choppiness, with the 0.93 level underneath offering a massive floor in the market. We have seen this hold quite nicely over the last several months, and as long as we can stay above there, it’s likely that the market will continue to at least “lean to the upside.” If we can break out to the upside, we could go as high as the 0.95 level, especially if there is a resolution to conflicts via the hot war in the Middle East, and of course trade wars.

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