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

• EUR/USD: At least two sizeable barriers at 1.4550; light stops immediately above 1.4555; decent-sized offers near 1.4600
• AUD/USD: Decent-sized bids from option players 1.0610/20
• USD/JPY: Solid bids 82.00, 81.80, 81.50. Offers still solid 83.10, 83.30 and somewhat larger near 83.50.
• EUR/GBP: Heavy stops above .8950
• EUR/CHF: Moderate buying interest near 1.2870

This could be part of the selling that the market’s been waiting on. Swissy fell very heavily very quickly and the CHF crosses followed suit.

I’m afraid I don’t have much to add to yesterday’s comments regarding some sizeable selling interest in USD/CHF. I know indirectly of two big prop traders who have shorted this pair in the last few days and they generally have good information behind them when they trade. They can of course get it wrong just like everyone else.

The daily chart looks to be turning bearish again with resistance on the day now around .9120. Support of course is at the recent record lows near .8965.

The fact that USD/CHF was unable to rally overnight despite the drop in the oil price is also moderately bearish although one can argue that the risk-off atmosphere had led to profit taking in the CHF crosses.

Dealers have no consistent explanation for the sudden move higher in the EUR. EUR/JPY set the ball rolling but the EUR has also made some decent gains against the GBP and the CHF.

With the oil price rising and talk of the European debt-contagion being now behind us, perhaps we’re seeing a rush to cover EUR short positions.

Liquidity is not particularly good which is no doubt exacerbating any moves.

Bloomberg reports on the additional taxes being imposed by the Brazilian government on foreign loans. Some suggestion that these measures could lead to a sell-off in emerging markets and indirectly lead to some risk-aversion, thus helping the JPY and the CHF.

There was a big move lower in the CHF crosses during early European trade yesterday (GBP/CHF in particular; I should know as I was long) and this followed on from what was ostensibly a bullish break in EUR/CHF during Asian trade. We often get false breaks during Asia especially in the less-heavily-traded pairs and that’s what we might have seen yesterday. It’s always best to wait for confirmation on these long-term technical breaks.

Fair bit stronger than median forecasts of +0.2%, +0.6% respectively.

Swissy has garnered some strength from the data, the EUR/CHF cross back down at 1.3170.

The daily chart posted a reversal pattern at 1.2400 and after rallying to 1.3200, it posted an imperfect double bottom at 1.2475. This nevertheless looks like a strong basing pattern and as you can see from the attached chart, the short-term MAs have turned bullish and are crossing the 100 and 200-day. As this is a longer-term trading set-up, it really needs a strong daily close well above 1.3200 for confirmation.

The market has been very long CHF for a long time now but some of the reports from the interbank market in recent days have suggested that the big move lower in the JPY was making these CHF longs nervous.

EUR/CHF has just broken above 1.3200 and there’s now the possibility of a double-bottom forming. This along with some bullish MA crossovers will be making the CHF longs even more nervous. Could be a big move brewing in this pair.

I’m hearing from a reliable source that there are some decent bids building on the 91 handle. These buyers are longer-term USD/CHF shorts who are getting a little nervous after the big spike higher in USD/JPY.

The CHF is different to the JPY in that it is also considered to be a commodity currency and so often moves in line with the AUD/CAD/NZD block but the CHF crosses and JPY crosses do tend to move in the same direction, in the short-term at least.