- The euro initially tried to rally a bit against the Swiss franc during the trading session here on Friday but then plunged as it looks like we are hell-bent on trying to retest the 0.93 level.
- The 0.93 level of course is a large, round, psychologically significant figure, but more importantly than that, it’s an area where we have seen a lot of support previously.
- In fact, it’s probably worth noting that it’s been support for roughly 6 weeks, so you have to think about that through the prism of what the most likely of outcomes is.
While I’m not necessarily particularly bullish on the euro itself, I do recognize that short-term traders are likely to continue to look at this through the prism of “playing the bounce” if we do in fact get that set up. Alternatively, if we were to break down below the 0.93 level, then I think we could see a drop down to the 0.92 handle. There is a ton of support between those 2 levels though, so I think if we get some type of significant drop, I’ll be looking for a bounce to turn around and pick up even more value in the euro.
Swiss National Bank
Keep in mind that the Swiss National Bank is very likely to get involved in this market for starts breaking down to rapidly, because quite frankly, this is a yeast situation that they monitor closely. After all, 85% of Swiss exports end up in the European Union, and they do not like it when things get out of sorts.
The market will be very sluggish most of the time, as there is a lot of cross-border action regardless. After all, if there is a lot of necessary currency exchange, it does have an influence on the market, much like you see in the EUR/GBP pair, or the USD/CAD pair. In other words, a certain amount of patience will be needed.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.