As expected for this week, volatility is very subdued as investors and workers around the world prepare for the holiday season. With Christmas coming on Thursday this year, markets are put in a precarious situation of having to be open to start the week with very little attention being paid to it. Regardless of the attention though, the markets are open, and there are opportunities that could be had. Earlier I mentioned how the USD/JPY was appearing to repeat history as it nears the 120 level once again and that recurrence could have effects on other currencies related to it as well. In fact, the CHF/JPY looks like it has been rebuffed at an interesting resistance level that could soon spell out a fall back down.
While the Swiss National Bank made the bold decision to cut their interest rates to negative last week, the reaction to that move has been somewhat lackluster. After an initial surge in the EUR/CHF up to nearly 1.21, the pair has nestled back down to within 30 pips of the 1.20 floor, which is sure to frustrate an SNB official or three. Therefore, it may not be out of the realm of possibility for the SNB to perform a little trading of their own during this low liquidity environment to essentially drive the point home. If that is the case, the CHF/JPY could be following the technical channel it has carved out over the last couple weeks and test the lower bounds of that level.
Figure 1:
Source: www.forex.com
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