Key Economic Data - Coming Up Today (All Times GMT+2)
EURUSD Support areas include 1.1600, 1.1567,1.1500, 1.1450 1.1400, 1.1350.
The CHF rose in devastating fashion pushing the EURCHF down 4500pips (45cents) and the USDCHF 3000pips (30cents) in 12 minutes of market mayhem. The Swiss National Bank had pledged to fix and support the EURCHF exchange rate at 1.20 since September 2011, a move designed to support their national economy and protect their export companies. Swiss exporters ‘main market is the Eurozone and the decline of the EURCHF from 1.68 in 2008 to 1.0060 in 2011 had increasingly made Swiss companies less competitive versus other rival exporting countries. With the EURCHF trading above 1.20 early in the morning the pair quickly moved to 0.74 shedding 46 cents while the USDCHF which had been trading at 1.0200 declined to 0.72 and lost 30 cents in value. In the aftermath the EUCHF climbed back above 1.000 but the recovery has been capped by the 1.06 level so far and the current price is 1.0124, while the USDCHF has recovered to a high of 0.91 and is now trading at 0.8690.
The EURUSD fell to 1.1567 from 1.18 during the CHF power moves and swiftly recovered up to 1.1780. The price has since retreated back to 1.1620 and we are trading at 12 year lows on the pair. The decision of the SNB raises questions as to why they no longer feel they can support the Euro currency. This could be a Swiss affair relating to their own policies or may imply that the ECB will conduct a larger than expected QE program, this theory has been discussed by analysts at Goldman Sachs. On the other hand an unwillingness to prop up the Euro could stem from concerns of a Greek exit from the common currency. The pair has slipped below the 1999 launch price of 1.1747 when the Euro currency was first unveiled to markets. This morning Eurozone Final CPI y/y is forecast to reveal deflation to the tune of 0.2% annualized. In the US CPI data out today is expected to show a month over month contraction of -0.3%.
The week comes to a close today and the price action will be significant. Traders will seek to adjust their positions and align their outlook with the recent developments and risks that have surfaced in the markets. Holding trades over the weekend can result in major news releases or events affecting open positions. This will lead to high volatility today as portfolio's are adjusted and fine-tuned. Next week will feature interest rate decisions in Canada and in the Eurozone.
Resistance levels above are at 1.1700, 1.1800, 1.1850 1.1975, 1.2000, 1.2200, 1.2300.
EURCHF 5 Min Chart
EURCHF 10 Min Chart
USDCHF 10 Min Chart
EURUSD 10 Min Chart