Foreign exchange market update: EUR/CHF – What is next?

Foreign exchange market update EURCHF: what is next?
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0.90 or 1.10?

The franc has quietly but continuously appreciated over the past two weeks. This appreciation was hardly discussed internationally, but is of decisive importance for the future development of the franc.

A de facto end to negative interest rates on savings, solid economic development and a central bank with a clear vision where exchange rates and interest rates should be in the future are probably the most important arguments for the current strength of the franc.

While in the Euro area it is still not clear how high the first rate hike will be, the Swiss National Bank (SNB) clearly communicated its goals and its determination to continue and to ensure a stable environment in Switzerland.

Surprisingly for many, the SNB confirmed that the franc is currently less overvalued than it was a year ago and made clear, that the SNB will step in if a sharp rise or fall of the franc should occur – a similar message to what we have received from the Polish central bank.

If you read between the lines, this could result in a wide trading range of 0.90/0.95 – 1.10 for the next few months.

Support 0.9950

Resistance 1.0350
Resistance 1.0500

The chart below shows the potential trading range of the EUR/CHF rate for the next few months:
Foreign exchange market update: EUR/CHF chart
Source: TradingView

The European Central Bank (ECB) meeting on July 21st will definitely create some volatility in the market. An interest rate hike of 50 basis points cannot be ruled out, in line with their Swiss peers. A strong franc is currently preventing “imported inflation” and, therefore, a stronger EUR could also be of interest to the ECB.

For more information on the foreign exchange market update, please feel free to contact our forex experts! You can also check our live currency market overview.

Please note that this elaboration was completed on 04/07/2022 13:28 CET.
This article is for informational purposes only and does not take into account the particular circumstances of the readers. It does not constitute financial advice. The content of this article is not intended as an offer or solicitation to buy or sell any fx or to take any other action and are not intended to form the basis or part of any contract. Clients should seek independent professional advice and draw their own conclusions with respect to the suitability of the transaction, including its economic merits and risks.The information contained in this article is public data and has been obtained from sources believed by amnis to be reliable and accurate. Amnis Treasury Services AG makes no warranty or representation as to its correctness, accuracy or completeness for a particular purpose. Neither Amnis Treasury Services AG nor any of its employees shall be liable for any damages whatsoever arising out of the use of this article, its contents or otherwise.

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Gerhard Scharinger
Gerhard Scharinger is the Head Markets of amnis. He is an expert in Foreign Exchange, Treasury Management, Economics and Hedging. Besides various published articles and foreign exchange news he is also an international speaker at different events. Follow him and amnis on LinkedIn, Twitter and Facebook to keep up with the latest industry news and insights.
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