• EUR/CHF bears are running head in with weekly support.
  • 1.050 could be a tough nut to crack from a technical perspective. 
  • SNB is potentially comfortable with a stronger CHF instead of hiking rates. 

EUR/CHF is turning heads in the currency markets at the start of the week as the bears take control and target an imminent break of the 1.05 key psychological level. At the time of writing, EUR/CHF is trading down 0.21% after sliding from 1.0546 to a low of 1.0515.

This is the lowest level since May 2020 for the euro against the safe-haven Swiss franc when EUR/CHF was at 1.0504. A double whammy of inflation fears and renewed concerns over the COVID-19 pandemic that is sweeping across mainland and eastern Europe in a fresh wave is pressuring the risk-sensitive markets.

Swiss National Bank governing board member Andrea Maechler said modest Swiss inflation, at an annual rate of around 1.2%, was capping the franc's rise. But she reiterated the SNB's commitment to currency market interventions designed to limit if needed, the effect that the Swiss franc's strength has on Switzerland's export-orientated economy.

CHF is a natural hedge against inflation

Deutsche Bank's Robin Winkler argued that the franc is a good stagflation hedge, ''and the SNB is likely to be more tolerant of currency appreciation than in the past, considering it insurance against importing inflation from the Eurozone.''

''The rates market has been trying to price the first hike from the SNB next year, in sympathy with the ECB, but in our view the SNB will use the exchange rate, rather than the policy rate, to tighten policy.''

EUR/CHF technical analysis

While there are prospects of a break of 1.0500, there are also chances for a significant correction to the upside in the near future, from a technical standpoint. 

The weekly chart shows that the price has fallen for eight consecutive weeks without a correction. This is the longest weekly losing streak since the turn of 2010. While that in itself is not a reason to try and catch a falling knife, it does give rise to the prospect of a correction in the near future.

Profit-taking could emerge around a test of the 1.0500 level and result in consolidation and a phase of accumulation that could well target the July 2020 lows that have a confluence with the 23.6% Fibo at 1.0605 and then the November 2020 lows that have a confluence with the 38.2% Fibo near 1.0660. On the downside, 1.0470 could be a stronger level of support according to the monthly chart should the bears conquer bullish commitments at 1.0500. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD: Bulls step in at month-end, eyeing the upside

EUR/USD is set to close off a bearish week towards a test of 1.11 the figure after breaking out of the bearish weekly wedge to the downside. Bulls have an eye on the weekly M-formation and prospects of a significant correction. 


GBP/USD slumps toward 1.3350, renews five-week lows

GBP/USD stays under constant bearish pressure on Thursday and trades at its lowest level since late December below 1.3370. Following the upbeat growth data from the US, the US Dollar Index is rising more than 0.7% on the day above 97.00. 


Gold licks wounds at three-week low near $1,800 amid firmer USD

Gold bears take a breather around $1,797 as Friday’s Asian session begins, following a $50 slump in the last two consecutive days to a three-week low. The yellow metal awaits fresh clues after piercing the $1,800 threshold the previous day.

Gold News

Bitcoin struggles against resistance as bulls keep their eye on $40,000

Bitcoin price action faced intense selling pressure after the Fed’s decision, with Bitcoin losing more than 5% from its Wednesday high. If the sell-off from the top wasn’t discouraging enough for bulls, then the daily close in the red certainly added insult to injury.

Read more

Apple (AAPL) Earnings for Q1 beats estimates on EPS and revenue

Apple (AAPL) reported earnings after the close on Thursday. Earnings per share (EPS) came in at $2.10 versus the estimate of $1.89. Revenue was $123.9 billion versus the estimate for $118.66 billion. AAPL is trading at $162.40 in Thursday's aftermarket, a change of 2% versus the regular session close of $159.16.

Read more