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15 Jan 2015
SNB scraps its CHF floor, sends EUR to a new low – FXStreet
FXStreet (Barcelona) - Valeria Bednarik, Chief Analyst at FXStreet, comments on the SNB’s decision to scrap its EUR/CHF floor at 1.20, and adds that the sudden move sent EUR/USD pair to make new lows in the 1.1600 area, with the pair now supported by 1.1660 levels in the short-term.
Key Quotes
“The Swiss National Bank (SNB) is discontinuing the minimum exchange rate of CHF 1.20 per euro. That’s the initial sentence of a press release that sent all hell breaking lose this morning, with Swiss franc appreciating by hundreds against the EUR and the USD, and dragging the EUR/USD to a fresh almost 10 year low in the 1.1600 area”
“From a fundamental perspective, is hard to imagine how Switzerland’s decision will affect its major economic partner, Europe. But worth keeping in mind that the SNB was one of the largest EUR buyers up to today, which means the risk of an upward movement in the common currency, has increased exponentially for the moment, and after the dust settles.”
“In the meantime, the technical picture continues to support the downside, as the 4 hours chart shows that the price of EUR/USD was contained by a mild bearish 20 SMA, whilst indicators maintain a strong bearish momentum well into negative territory. “
“The immediate short term support stands now at 1.1660, and a downward acceleration below it should lead to a retest of 1.1610 price zone, while if this last gives up, 1.1550 comes next in the heat of the battle.”
“At this point, buying seems not an option, as only a steady recovery above 1.1790 should signal an upward continuation in the pair.”
Key Quotes
“The Swiss National Bank (SNB) is discontinuing the minimum exchange rate of CHF 1.20 per euro. That’s the initial sentence of a press release that sent all hell breaking lose this morning, with Swiss franc appreciating by hundreds against the EUR and the USD, and dragging the EUR/USD to a fresh almost 10 year low in the 1.1600 area”
“From a fundamental perspective, is hard to imagine how Switzerland’s decision will affect its major economic partner, Europe. But worth keeping in mind that the SNB was one of the largest EUR buyers up to today, which means the risk of an upward movement in the common currency, has increased exponentially for the moment, and after the dust settles.”
“In the meantime, the technical picture continues to support the downside, as the 4 hours chart shows that the price of EUR/USD was contained by a mild bearish 20 SMA, whilst indicators maintain a strong bearish momentum well into negative territory. “
“The immediate short term support stands now at 1.1660, and a downward acceleration below it should lead to a retest of 1.1610 price zone, while if this last gives up, 1.1550 comes next in the heat of the battle.”
“At this point, buying seems not an option, as only a steady recovery above 1.1790 should signal an upward continuation in the pair.”