The euro continues to be bullish overall against the Swiss franc, despite the fact that the Monday session is somewhat weak.
EUR/CHF
The euro initially tried to rally against the Swiss franc, but we have since seen the market fall apart and really start to fall apart. That being said, there is plenty of support underneath, and ultimately this is a market that has been in an uptrend for some time.
I do think that there is plenty of support in the neighborhood, especially the closer you get to the 0.94 level. The 0.94 level was previous resistance and now could be support based on market memory.
Furthermore, you have to look at the interest-rate differential, as the central banks are in completely different worlds at the moment. The ECB has recently raised rates, while the Swiss National Bank continues to stick around the zero band. The Swiss are going to continue to have a serious lack of interest in raising rates, while the Europeans may be forced to.
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It could be a situation where some have to assume that the Swiss will be stuck in the same energy-inflation situation, but they would have a long way to go before they would match the ECB. In fact, it is almost impossible to imagine, because the Swiss and the Europeans will have the same problems, so the differential should pretty much stay the same.
Furthermore, the markets are now starting to look at this through the prism of the carry trade, and the carry trade continues to be a big part of the market, as getting some type of yield is really the biggest attraction that we see here right now. In fact, you can see it in the bond markets quite drastically.
The markets are also trying to figure out where to make the most money put to work for them
The Swiss markets are essentially flat at the moment, while the European indices at least have some type of momentum to them. All things being equal, I prefer to buy this market on dips, as it is a nice long-term uptrend.
Breaking above the 0.95 level unleashes a much bigger move to the upside. I would also point out that you get paid at the end of every day, and that helps smooth out the curve a little bit when it comes to your equity.
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