USD/CHF Breaks Resistance on Firm SNB Decision
Posted on March 12, 2009 by Yohay
Filed Under Forex News | 10 Comments
USD/CHF made a huge jump of over 300 pips immediately after the SNB firmly implied that the it wants the Swiss Franc down. The Swissy broke a major resistance line on the way, and is heading north very fast.
The Swiss National Bank lowered the target Libor rate to 0.25%. That was widely expected. But the accompanying statement was staggering: SNB is really afraid of negative inflation and vowed to fight it with all its force.
In the official paper, they implied that they want to see the Swiss Franc devaluating. Forcibly intervening in the forex market is a rare move by a central bank.
This rare move caused a rare move in USD/CHF: it leaped from about 1.16 before the release to 1.1950 at the peak. It now relaxed to around 1.19. It broke the resistance line of 1.1884 that was a peak in February 20th. It last saw these levels exactly three months ago, as it was tumbling down. The next major target is 1.2250, the peak from December.
Also against the Euro, the Swiss Franc collapsed and broke resistance. EUR/CHF jumped from 1.48 to 1.53, now “relaxing” at 1.52. Broken resistance was at 1.5192, a high from January 28th. This cross is closely watched as well.
Huge moves are also seen in other crosses such as the CHF/JPY and GBP/CHF.
I’m covering this big move one hour after the release, after it began. I wonder if this will continue and we’ll see a continous decline of the Swiss Franc.
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