EUR/CHF hammered down to two-month low, below 1.0200 mark after hawkish turn from SNB

• EUR/CHF came under intense selling pressure in reaction to the SNB’s surprise 50 bps rate hike.
• Stronger USD weighed on the shared currency and further exerted some pressure on the cross.
• Acceptance below the 1.0200 round figure would be seen as a fresh trigger for bearish traders.

The EUR/CHF cross witnessed aggressive selling during the early European session and plunged nearly 250 pips from the daily high in reaction to a surprise hawkish shift by the Swiss National Bank. The cross was last seen trading below the 1.0200 mark, just a few pips above a two-month low touched in the last hour.

The SNB stunned investors with a 50 bps rate hike and left the door open for further rate hikes to counter rising inflationary pressures. This, in turn, provided a strong boost to the Swiss franc and exerted heavy downward pressure on the EUR/CHF cross. The downward trajectory accelerated further after the SNB Chairman Thomas Jordan - in the post-meeting press conference - said that the Swiss franc was no longer highly valued because of the recent depreciation.

On the other hand, the shared currency was pressured by resurgent US dollar demand and nervousness over fragmentation risks. It is worth recalling that the European Central Bank on Wednesday deliver any new measures to support highly indebted nations in the bloc. The ECB issued an underwhelming statement that it would apply flexibility to reinvestments of the PEPP. This further weighed on the euro and contributed to the heavily offered tone surrounding the EUR/CHF cross.

With the latest leg down, spot prices now seem to have confirmed a near-term bearish breakdown through the 1.0230 horizontal support. Acceptance below the 1.0200 round figure will reaffirm the negative bias and pave the way for a further depreciating move. The EUR/CHF cross could then accelerate the slide towards challenging the 1.0100 psychological mark.

Technical levels to watch