Foreign exchange market update: EUR/CHF <1

EUR/CHF below 1.0000

The status of the Franc as a “safe haven” is unbroken and in the course of the escalation in Ukraine, a rate below EUR/CHF 1.0000 was reached for the first time since 2015.
This is likely to have called the Swiss monetary authorities into action. The SNB’s increased sight deposits suggest that the EUR/CHF exchange rate was supported by the central bank. If EUR/CHF moves towards 1.0000, further buying by the central bank can be expected in the short term.

Despite the fact that interest rates in Switzerland are still negative, demand for Swiss francs is unbroken and even rising inflation coupled with negative interest rates is not deterring market participants to buy more Francs. However, one thing is clear: the specter of deflation is history for the time being and the SNB could also tighten interest rates if prices continue to spiral upwards.

For EUR/CHF the overall picture remains clouded for the time being and only an end to the conflict in Ukraine could lift the currency pair back into the well-known trading range of 1.0500-1.1200.

Downtrend since 2021

From a technical point of view, we have been in a downtrend since March 2021. A strong support zone could form in the 1.0000/0.9980 area after the Euro’s sharp fall.

Support 0.9980-1.0000

Resistance 1.0400
Resistance 1.0500

The chart below shows the current EUR/CHF downtrend:

Source: TradingView

An end to the war in Ukraine could trigger a trend reversal in the currency pair. A sustainable move above the price mark of EUR/CHF 1.0500 is necessary for this. Continue to monitor central bankers’ comments for potential policy adjustments.

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Disclaimer:
Please note that this elaboration was completed on 28/03/2022 11:01 CET.
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