EUR/CHF: One Year of Free Market (07/2010-07/2011): February 2011

EUR/CHF looks like its forming important technical support at 1.2700 and should go higher. EUR/GBP and EUR/JPY are best described as choppy but the EUR/AUD is also exhibiting some ‘basing’ tendencies. With the USD in sell mode, the path of least resistance for EUR/USD would seem to be up.

It will not happen in a straight line so we can expect fairly deep pullbacks from time to time. I sense that 1.3850 might prove a tough nut to crack over the next few days and with EUR/GBP in a short-term down phase, there should be some selling opportunities intraday as well.

I’d suggest a 1.3770/1.3850 session range with a neutral bias intraday.

A couple of big shops issued sell CHF recommendations earlier in the day but judging by the soggy close for the week in both USD/CHF and EUR/CHF, those calls look a bit premature.

USD/CHF probed above resistance at 0.9300/10, pushing as high as 0.9320 on stops but has spent the bulk of the session back below 0.9300. A close below that level leaves downward pressure intact.

EUR/CHF trades at 1.2757 headed into the close….

I’ll be glad when this week is over.

Swiss KOF leading growth indicator 2.18 in February from revised 2.16 in January (was 2.10 initially),  much better than median forecast of 2.08.

EUR/CHF has traded slightly easier in wake of data, presently at 1.2800.

Goldman Sachs have put out a buy recommendation on EUR/CHF as well. And a buy USD/CHF one as well.

I have no details, but that’s what I’m told by a couple of sources.

Anyone got the details please let us know.  We’d be jolly grateful. Thanks.

Cross up at 1.2815 from early 1.2785.  Haven’t got details as yet.

Details:  long at 1.2800.  Stop  1.2400. Target 1.3500.

UPDATE:  PLEASE NOTE I’VE ADJUSTED TARGET, TO 1.3500 FROM 1.3800.

USD/CHF has broken and closed below previous major support so the path of least resistance remains down. The levels to watch on the topside are at .9310/20 and as long as we are below there, the outlook is bearish.

EUR/CHF on the other hand ran into the “Swiss mafia” buying between 1.2700-25 (and you can’t say I didn’t give you plenty of warning that they were there!!) I prefer to buy dips here with a fairly tight stops below 1.2675ish.

The conclusion of this analysis would seem to be that we should be buying dips in the EUR/USD.

The orders and flows mentioned yesterday in EUR/CHF and EUR/GBP have proven to be very useful; EUR/CHF bottomed out in Europe overnight exactly where the big buy orders were tipped to be (1.3700/25), and the short covering by big players in EUR/GBP over the last 48 hours has driven that pair 150 pips higher.

Some of the flows that we’ve been talking about over the last few days have been suggesting that the GBP might continue to struggle on the crosses and this trend has indeed continued. The sterling and the US dollar are now clear leaders in the ‘ugly’ contest with all of the other majors, EUR, JPY, CHF and AUD, showing some significant strength. The most significant technical event being the daily close in USD/CHF below previous major lows.

Good luck today and TGIF.

I’m reliably informed that the level to watch on the downside is 1.2725 where there is some significant buying interest. The charts suggest that technical support around 1.2700 needs to hold if the recent recovery is to be sustained so I’d keep stops safely below this level.

Up from +1257 mln in December. Swiss watch exports rose 16.9% in nominal terms.

Elsewhere, UBS consumption indicator for Switzerland came in at 1.68 in January, down from 1.83 in December.

EUR/CHF trading down at session low 1.2860, swissy a major beneficiary of the spike in risk aversion as it’s a safe haven premium comes into play.

The full headline across Reuters newswires is that banks should “monitor transactions which could potentially represent misappropriated or diverted state assets”

We’ve seen quite a move back into the CHF over the last two days and the sight of Iranian gunboatssailing up the Suez canal will not alleviate tensions. With anti-government protests having spread to Iran, Qatar and Bahrain, the entire region remains volatile. Geo-political tensions traditionally encourage FX flows into the USD and the CHF.

USD/CHF has triggered stops below the 0.9675 level, sending stale longs to the sidelines.

A European central bank was rumored buying some CHF…Could be a commercial transaction (Inter-governmental payments, etc…) or perhaps they are helping out a fellow central bank (like the SNB selling some of their under water euros…)

Hard to know, but the franc is stronger against both the dollar and euro…

Someone just told me UBS has raised it’s 3-month target for the cross to 1.3500 from previous 1.3000.  Don’t know whether they did it today or before, but they’ve done it.

Cross sits at 1.3100.

EUR/CHF up at 1.3105 from around 1.3090 when I arrived.  Talk Swiss private bank out of Zurich has been decent buyer this morning.

Just a recap on some of the overnight flows from some of the more influential players

• Asian central banks bought EUR/USD between 1.3425/50
• China bought cable around the 1.6000 level
• Plentiful Japanese corporate sellers in USD/JPY around 83.70
• Major hedge fund sold EUR/CHF

We’re knocking on the door…

EUR/CHF is shooting higher with the military seen as the best possible caretaker until elections. It brushed 1.3200 on the news.

Oil is falling on the news as fears of the Suez Canal being blocked evaporate. Crude is down to $86.00.

EUR/USD edged up for a brief time on the news (1.3572) but is now steady at 1.3552.

• This pair has been below it’s 100-day MA since June last year and the overnight close was exactly on it’s current level at .9690
• The January highs at .9780 were also a 61.8% retracement level and a break above there would weaken the downtrend.

Another factor to note for the CHF is the heavy short-covering in pairs like EUR/CHF and GBP/CHF over the last few days particularly by discretionary-type hedge funds who rely heavily on market information.

EUR/JPY is the most liquid cross during Asian trade and that’s where the buying is being concentrated but all of the other major EUR crosses including the EUR/CHF, EUR/GBP and EUR/AUD have moved steadily higher in atypical Asian trade one would have to say.

It will be interesting to see whether Europe ignores this Asian move and reverses immediately or whether we see further gains. Should be also interesting to see if China re-emerges on any approach to 1.37 in the EUR/USD.

Just reading some interbank chatter regarding the EUR and whilst China have been selling rallies in EUR/USD, this is not thought to be a substantial interest. On the contrary, there is talk of some large EUR buying to go through over the next three days against most of the major currencies and that last night’s cross moves were just the beginning. Sorry but I have no idea what it might be related to but the sources are decent.

I personally have no great feel for the EUR at the moment so I’m leaving it alone.

Just a bit more flow information on the grapevine. Not sure exactly what the trigger was for this, and I don’t know if the CHF bubble is finally about to burst or not, but there are a lot of CHF longs in the market and surely at some stage they must ask themselves the logic behind being long CHF at these elevated levels.

More stops reported through 1.3135

I guess we can blame the calming tensions in Egypt for the recent spike in EUR/CHF. The SNB must be very pleased no matter what the catalyst. Stops were triggered above the 1.3070 level this morning and we briefly pushed through 1.3100 to 1.3105.

We look set to close above a four-month old downtrend today which came in at 1.2977. But looming just overhead is resistance at 1.3119, the 50% retracement of the 1.3840/1.2398 decline.

Last night in NY, the market bought the CHF very aggressively on news of escalating violence in Egypt but then sold it back just as quickly, leading to a very volatile session for pairs like EUR/CHF.

Traders report a heavy pick-up in action in EUR/CHF as intraday and more medium-term players both throw in the towel on CHF longs predicated on Egyptian unrest. Also helping the rally are hopes that Europe is close to sorting out its comprehensive bailout package.

Stops were tripped above the 1.3000 level and more lie in the 1.3040 and 1.3075 area.

EUR/USD has bounced back from 1.3770 area, now at 1.3793 with help from the cross.

It’s All Fun And Games In EUR/CHF…

Risk Aversion Returning As Egypt Erupts