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Christopher Lewis
eurchfWEEK

The EUR/CHF pair broke higher during the course of the week, slamming into the 1.08 region. This is an area that should be rather resistive, but we do believe that the Swiss National Bank will continue to work against the value the Swiss franc, and as a result it’s only a matter of time before we break out. If we can move above the 1.08 level, we feel that the market should continue to go much higher. The Euro is getting a bit of a bid in general, and that of course will be exacerbated by the Swiss National Bank in this particular pair. With that, we are buyers of this pair above the 1.08 level, and at that point in time we think it would only be a matter time before he reach towards the 1.20 level.

It’s not going to be a straight shot, but we do think eventually that’s where this market is going, back to where we started the precipitous fall. That was when the Swiss National Bank step away from the currency peg at the 1.20 level that it had been enforcing for the previous 4 years against the Euro. A complete reversal of that would be a victory for the Swiss, assuming that it could stick. At this point in time though, we feel that the market will eventually try to reach that area to test the will of the central bankers.

With this, it’s only a matter of time but we do recognize that a pullback from this area is possible. If we do get that pullback, we would only assume that it was a simple exercise in building momentum as it will take something special to make a fresh, new high at this point. We think that this market will continue to be very interesting watch, but you have to keep in mind that it very rarely moves rapidly, so patience will be needed either way. With that, we have zero interest in shorting this market, simply because we feel it’s only a matter time before the Swiss make another move.


 

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