- EUR/CHF holds modest gains after a two-day rebound, though intraday momentum is fading.
- The cross is trading just below the 100-day EMA, with resistance at the 0.9400 psychological mark.
- Swiss Franc demand continues to limit Euro upside, keeping the cross locked in consolidation.
The EUR/CHF is trading higher on Friday, although momentum is cooling after touching the day’s peak, with the cross still on track for a second straight day of recovery following a three-day decline earlier in the week. The cross is trading near 0.9358 at the start of the American session, holding just below the 100-day Exponential Moving Average (EMA). The broader picture shows the pair locked inside a multi-month consolidation pattern, with 0.9275 acting as the range floor and 0.9450 serving as strong resistance.
Momentum indicators remain broadly neutral, consistent with the range-bound structure. The Relative Strength Index (RSI) currently stands at 48, indicating a lack of conviction. A move above 55 would strengthen bullish momentum, while a drop below 45 could open the way to further losses.
The Moving Average Convergence Divergence (MACD) is hovering close to the zero line, with the MACD line marginally above the signal line. Histogram bars are shrinking, reflecting a loss of recent bearish pressure but without strong bullish confirmation. The setup highlights indecision, though a clear push above zero would confirm upside momentum, while a rollover below the signal line could revive downside pressure toward the range floor.
On the downside, immediate support emerges at the weekly low near 0.9320, followed by the lower end of the current range around 0.9275. A break below these levels could reinforce CHF strength and expose the 0.9200 handle. On the upside, initial resistance is located at the 100-day EMA near 0.9373, followed by the weekly high at the 0.9400 psychological mark. A decisive close above that zone would shift focus toward 0.9450, the upper limit of the recent consolidation.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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