Support Line – Courtesy of the Bank
Posted on September 30, 2009 by Yohay
Filed Under Forex Opinions | 5 Comments
The SNB did it again. They intervened in the forex market to weaken the Swiss Franc. Against the dollar, these moves sure are short lived, but regarding the Euro, the central bank sure marked a support line for EUR/CHF.
The Swiss National Bank intervened again in the currency markets to weaken the national currency. Like in previous cases, USD/CHF jumped in minutes by about 150 pips, from 1.03 to 1.0450. Like in previous cases, this jump was short lived. USD/CHF is now back down to 1.0370. Looking at the near past once again, USD/CHF is going down.
Each intervention takes it up for short time. Later on, the pair falls down below the pre-intervention levels. I’ve already written that such interventions are a great trade opportunity. EUR/CHF
Switzerland has lots of trade with members of the European Union, including its two close neighbors: Germany and France. Both economic giants are the pillars of the EU. Data in both countries moves the Euro. A strong Euro is an interest of the SNB.
Swiss exports paid in Euros are worth more Swiss Franc after each intervention. This helps the Swiss economy. While the moves against the dollar fail, the moves against the Euro manage to keep it above a very specific line: 1.50. Each time that EUR/CHF drops towards this level, the bank intervenes and keeps it above the water.
The central bank doesn’t change the direction of the Swiss Franc against the Euro. It just safe guards it from reaching low levels. Since the big intervention on March 12th,EUR/CHF hasn’t fallen below 1.50.This number is a round number, but it has never served before as a support or resistance line. The SNB created it and is guarding it.
Enjoyed the post? You may want to subscribe by RSS feed or Email.Tags: Central Banks,EUR/CHF,intervention,resistance line,SNB,support line,Swiss Franc,Swissy,USD/CHF
Comments
5 Responses to “Support Line – Courtesy of the Bank”
Leave a Reply
Popular Forex Posts
Daily FX Headlines- Forex Strategy Corner: Bollinger Bands Techniques for Trading September 2, 2010
- EUR/USD: Trading the Change in U.S. Non-Farm Payrolls September 2, 2010
- US Dollar Forex Options Sentiment Points to Pullbacks September 2, 2010
- The FX Market has now Entered the Pull of Friday NFPs September 2, 2010
- British Pound Forecast to decline Against Japanese Yen September 2, 2010
-
Stay up to date!
-
-
[...] Switzerland, the day after the SNB intervention brings the SVME, which established its place above 50 and even rose to 54.3 points, much more than [...]
[...] today. Will the dollar’s strength continue also today? How will the dollar close the week? Will the Swissy recover from the intervention? Let’s see what will impact the markets [...]
[...] Apart from the dollar weakness, USD/CHF has now been released by the Swiss National Bank: the SNB keeps its eye on the EUR/CHF, and clearly marked the a rate of 1.50 as a support line. I already wrote that this resistance line is a courtesy of the bank. [...]
[...] Roth defended the round 1.50 line for quite some time. This eventually failed. [...]
[...] the past, the SNB intervened to keep the EUR/CHF value above 1.50. When this level was breached, the SNB made small interventions to stop it from deteriorating [...]