EUR/CHF, USD/CHF and CHF/JPY Forecasts – Franc in Focus as SNB Holds

EUR/CHF Technical Analysis

The Euro rallied significantly against the Swiss franc during the early hours on Thursday as we broke above the crucial 0.91 level and challenged the 50-day EMA.

We have pulled back a bit since then, but it looks to me like a market that is still trying to continue to go higher after the recent base building exercise and potential short-term V bottom we have seen. Keep in mind that the Swiss franc is a safe currency, and if we start to see traders sell the Swiss franc, that could be a very positive sign going forward. Now we will just have to wait and see, but it looks more or less like a buy on the dip type of scenario.

USD/CHF Technical Analysis

The US dollar has been pretty choppy against the Swiss franc as well after rallying pretty significantly during the previous session but ultimately, we still have to look at the 200-day EMA presently near the 0.80 level as a bit of a ceiling.

However, I do think we are going to continue to see traders shy away from the franc not only due to risk appetite picking up but the reality is that the Swiss National Bank will intervene if we get too far to one side. They have been verbally intervening for a moment now, but it looks like the market has finally started to take it seriously.

CHF/JPY Technical Analysis

The Swiss franc has fallen against the Japanese yen as we are now testing the 50-day EMA. The Swiss franc Japanese yen pair, of course, is an interesting way to look at what the carry trade may do, and right now, even though the Swiss franc has fallen, it is still much stronger than the Japanese yen, going back to at least August.

So, at this juncture, if we can bounce a bit, I think traders will jump back in and take advantage of what has been a long-term uptrend. In other words, even if you are not trading this pair I think what you need to look at is how weak the Japanese yen really is. Now we, of course, have to worry about a lot of headlines out there about the Japanese complaining about the weakening yen, but ultimately, this is a battle between two central banks that just simply will not tighten monetary policy. So whichever one is doing worse is the one you want to shorten your carry trades.