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.