The head of the Swiss National Bank resigned from his post. The resignation, effective immediately, leaves the SNB without a leader at a time when it is already having trouble defending the floor under EUR/CHF.
This may pave the way for EUR/CHF to fall, with EUR/USD following suit, especially after it already retraced some of its losses. Any new wave of drops may come.
Kaysha Hildebrand, wife of ex-SNB chief, bought a significant amount of US dollars, three weeks before her husband launched the very successful intervention to weaken the Swiss franc. The SNB initiated a 1.20 floor under EUR/CHF in September, and defended it very successfully.
He initially said that he didn’t know about his wife’s actions, but the press in Switzerland pushed on and he eventually resigned with no replacement.
The 1.20 floor has already been under pressure due to the weakness in the euro-zone and the fall of the euro. Speculators might check out the Swiss central bank’s strength, when EUR/CHF is already closer to the floor, around 1.21.
EUR/USD, that managed to retrace some of the sharp losses after the Non-Farm Payrolls, might find it hard to hold on to the gains.
The pair currently holds on to support at 1.2760, but this resignation could send it to test this line, and make another dip lower, towards the low point of 1.2663.
For more on the euro, see the EUR/USD forecast.