CFD Trading Rate Euro vs Swiss Franc (EURCHF)

• EUR/CHF bottomed and formed a Bullish Engulfing candlestick pattern on September 11. 
• Since then it has recovered then pulled back – it could soon resume upside again. 

EUR/CHF reached a temporary bottom on September 11 and recovered. It is currently trading above 0.9400. There are signs that suggest it could continue higher despite the overall bearish medium-term trend.

EUR/CHF Daily Chart 

EUR/CHF formed a Bullish Engulfing Japanese candlestick pattern when it touched bottom on September 11. This occurs when price bottoms out, recovers and during the recovery day encloses – or "engulfs" – the whole of the preceding day's body in new day's body. The initial engulfing candle was followed by a confirmatory green follow-up day (shaded rectangle) adding confidence. This pattern is a short-term bullish signal. 

The pair has pulled back slightly since peaking on September 12, however, the correction has been shallow so far and it is possible the pair will resume moving higher. 

A break above the 0.9434 high (September 12) would confirm a continuation higher, with the next target at 0.9464, followed by 0.9513 in the case of a particularly bullish move. 

A break below 0.9369 would invalidate the bullish hypothesis and suggest a more neutral or bearish outlook.

EUR/CHF has recently risen above 0.9350 and 0.94, Société Generale FX analysts note.

Daily MACD is attempting across above its trigger line

EUR/CHF has recently carved out a higher trough near 0.9350 than the one achieved in August at 0.9210. This denotes downward momentum is receding.

Daily MACD is within negative territory but is attempting across above its trigger line. A brief rebound towards 0.9490, the 61.8% retracement of recent pullback can’t be ruled out.

The 200-DMA near 0.9580/0.9600 will be a crucial resistance zone near term. In the event the pair breaches 0.9350, there would be risk of a deeper pullback.

EUR/CHF is staying very soft and USD/CHF is continuing to plumb new lows, ING’s FX strategist Chris Turner notes.

SNB to intervenes in both USD/CHF and EUR/CHF

“We are not far away from the December 2023 low at 0.8333. We have no evidence for this, but we suspect that the Swiss National Bank (SNB) intervenes in both USD/CHF as well as EUR/CHF.”

“Watch out for any spikes in USD/CHF should it start to trade under 0.84.”

It looks like G10 policy rates (ex-Japan) are going lower, ING’s FX analysts Francesco Pesole and Chris Turner note.

EUR/CHF may struggle to stay above 0.95

“We are looking for at least another 125bp of ECB easing into next summer, if not 175bp. Switzerland is closer to the zero-bound constraint, however, and markets are reluctant to price the Swiss National Bank policy rate below 0.50% - just 75bp lower from current levels. Spread compression could therefore weigh on EUR/CHF into 2025.”

“We also think the SNB pays close attention to the real CHF. At the end of July, it was still some 4% off the highest levels seen in January 2024 and suggests the SNB may not emerge with strong verbal intervention until EUR/CHF is closer to the 0.91 area.”

“Geopolitics also means EUR/CHF may struggle to stay above 0.95.”

The overnight fall in the value of the JPY briefly left the CHF as the best performing G10 currency over the past five sessions this morning. In our view, this is not an accolade that the SNB will have welcomed, Rabobank’s senior FX strategist Jane Foley notes.

EUR/CHF to return to the 0.95 area

“We expect that the more settled market conditions of the past 36 hours or so will allow the CHF to continue to soften as some safe haven flows reverse. These factors suggests that the CHF is likely to continue finding good support from haven flows in the coming months. For much of the first half of this year, the CHF was in a weakening trend vs. the EUR.”

“The softer CHF will have been good news for Swiss exporters. Since very late May, the value of EUR/CHF has more or less reversed all of the move higher in the first 5 months of the year. EUR/CHF trended higher in late June, buy arguably the overall impact of the SNB’s June rate cut was limited by the ECB’s policy announcement in the same month.” 

“As markets settle down after the market turmoil earlier this week, we expect EUR/CHF to return to the 0.95 area. However, despite the likelihood of another SNB rate cut in September, we expect that safe haven demand will prevent EUR/CHF from trending higher medium-term. We have adjusted our EUR/CHF forecasts and expect a trading band to centre around the 0.95 to 0.96 area in the coming 12 months.

Safe haven demand for the The Swiss Franc (CHF) to pick up if the Eurozone were to run into a rough patch. Risk of jitters around French politics and its budget we see risk of dips in EUR/CHF towards 0.96 on a 1-to-3-month view, Rabobank’s Senior FX Strategist Jane Foley notes.

French political jitters may send EUR/CHF to 0.96

“In view of Switzerland’s history of deflation and disinflation, it can be assumed that the SNB tends not to welcome CHF strength. Despite this year’s modest weakening in the value of the CHF, EUR/CHF has been in a downtrend since 2007. Safe haven demand for the CHF, triggered by the GFC, picked up in 2010 and 2011 in reflection of the Eurozone debt crisis.”

“In September 2011, the SNB set a minimum exchange rate at EUR/CHF1.20, though this was suddenly abandoned in January 2015. After the initial volatility settled down, a period of relative stability followed before EUR/CHF re-embarked on its downtrend in 2018. As a rough rule of thumb, we would expect safe haven demand for the CHF to pick up if the Eurozone were to run into a rough patch.”

“While relief followed France’s news last weekend, it will remain difficult for the country to repair its budget position. Italy’s budget issues may also come into sharper focus this year. In our view this underpins risk of an easier policy bias into 2025. In view of the risk of jitters around French politics and its budget we see risk of dips in EUR/CHF towards 0.96 on a 1-to-3-month view.”