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The SNB put a floor under EUR/CHF, at 1.20. In the first hours after the shock the pair was just above this line, as the authorities struggled to stabilize their huge effort.

It has now drifted higher, taking a safer distance. What does this mean for USD/CHF and for EUR/USD?

USD/CHF

This upwards move has pushed Dollar/Swiss higher as well. The pair is pushing above the 0.8626 line which was an all time low before the recent plunge. It previously traded between 0.8550 to 0.8626, and now it is in a higher range.

The next serious resistance line is at 0.8780, so there’s a long way to go.  The SNB isn’t officially interested in USD/CHF, but cares more about the exchange rate with the euro, so the 0.8626 won’t necessarily provide strong support line 1.20 in EUR/CHF.

EUR/USD

There has been criticism about the SNB, about the correlation with the euro, especially in the current debt crisis. As Switzerland trades heavily with the euro-zone, it seems that they had little choice.

The move of EUR/CHF higher, currently around 1.2150, provides some breathing space for the Swiss authorities. This gap, of currently 150 pips, will allow them to absorb some fall of the euro against the euro and a fresh run to the “safe haven” Swiss franc.

So, this means more vulnerability for EUR/USD. The popular pair is currently between the 1.4030 and 1.41 lines. The initial reaction to the huge Swiss intervention was a jump of EUR/USD. But this faded away quickly, and the intervention in EUR/CHF morphed into a stronger USD/CHF.

So, in case that Europe is hit with more bad news on the debt crisis front, or with softer policy from the ECB, EUR/CHF has room to fall, and so does EUR/USD.

For more about EUR/USD, see the euro to dollar forecast.

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