EUR/CHF Hits New Post-Intervention Low

• Posted by Robert Sinn
• on April 3rd, 2012

Of all the markets that I watched closely last year at the height of the eurozone turmoil, $EURCHF was probably the most powerful and visible indicator of the stress within the European banking system. After watching the Swiss franc rise all the way to near parity with the euro, the Swiss National Bank intervened twice – the second intervention being the more powerful “nuclear option” of setting the exchange rate at 1.20 and vowing to defend that level at all cost. After inching lower for the past few weeks EUR/CHF has just hit a new post-intervention low this morning at 1.20315:

 

Considering that this pair is known for 50-100 pip spikes on rumors of the SNB raising the floor to 1.25 or 1.30 and that the SNB has vowed to defend the 1.20 level this seems like it should be a very low risk/high reward opportunity to go long. However, what if the eurozone debt crisis is beginning to boil up again in the form of Portugal & Spain? The SNB might be put to the test as investors run from the euro again and seek safety in a currency that doesn’t want their business – there are reports of SNB bids at the 1.2030 level and this is definitely a currency pair to keep on your radar over the coming weeks.

 

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