The Euro rose a bit against the Swiss franc on Tuesday, as the interest rate differential continues to have an influence here.
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EUR/CHF
The Euro has rallied against the Swiss franc during the trading session on Tuesday as we continue to see upward momentum. The interest rate differential continues to be a major factor in what happens here, and now that we are above the 0.93 level, it makes a certain amount of sense that there are some market memory issues to deal with, as this area had been a bit resistant in December of last year. If we can break above the 0.9350 level, then it opens up the possibility of a much bigger move.
Short-term pullbacks more likely than not offer buying opportunities in a market that has been very strong for a while now. With that being the case, I like the idea of buying any dip that we get in this market as it offers value, and of course you get paid at the end of every day to take that trade on.
Golden Cross and SNB Policy Pressure
The 50-day EMA is getting ready to break above the 200-day EMA, kicking off the so-called golden cross, and a lot of people out there will look at that as a very bullish turn of events. All things being equal, this is a market that I have no interest in shorting, and I do think that this is a market that is going to be heavily dependent on risk appetite.
But keep in mind that this is a currency pair that the Swiss National Bank pays close attention to because 85% of Swiss exports end up in the European Union, so they like the idea of cheaper Swiss francs for exports to sell in places like Berlin or Paris. Ultimately, it's only so far that this pair can go to the downside, and of course, with the overall momentum and the interest rate differential, it all compiles for a nice buying opportunity every time we dip. I don't think that we break out easily here, but given enough time, it very well could be.
