- Swiss franc tumbles across the board, sending EUR/CHF to highest since June 8.
- Despite the retreat from the top, euro still heads for biggest gain versus Swiss franc in a month.
The EUR/CHF gained speed on Tuesday and jumped to 1.0878, reaching the strongest level since June 8. Then, it pulled back and as of writing it trades at 1.0835/40, up 50 pips for the day, the biggest daily gain in a month.
The key driver of the rally in EUR/CHF is the combination of a weaker Swiss franc and also a decline of the US dollar. The EUR/USD pair climbed two hours ago momentarily above 1.2000 for the first time since April 2018 while at the same time USD/CHF hit 0.9100, the strongest level since Thursday. Still, the pair remains near five-year lows.
“Positive European developments and improving global risk sentiment will help CHF weaken. Tail risks that could lead to “flight to safety” inflows to Switzerland include material escalation in COVID-19 cases, rising geopolitical tensions (e.g. Italy, Brexit), uncertainty near to the US election, US-China trade war escalations”, wrote analysts at CitiBank.
The EUR/CHF continues to be supported by the improvement in risk sentiment and equity markets. From a technical perspective, the area around 1.0860 is a medium-term resistance, and a consolidation above would point to further gains. Short-term
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