EUR/CHF tumbles from above 1.0500 to 1.0370 after the ECB meeting

• Swiss franc rises across the board after the ECB meeting.
• Euro under pressure even as ECB announces it “intends to raise rates in July”.
• EUR/CHF off lows, still down by more than 50 pips.

The EUR/CHF reversed sharply on Thursday, falling 150 pips from the daily high to a three-day low in a few minutes on the back of the European Central Bank meeting.

EUR/CHF rejected from above 1.0500

After the ECB released the statement the EUR/CHF peaked at 1.0513. But again, as it happened in May, the euro was rejected and started to decline. It continues to face a strong resistance around 1.0500. On the flip side, on a closing basis, key support levels are seen at the 1.0400 zone and below at 1.0250.

The downside accelerated on Thursday after Lagarde’s press conference. The cross bottomed at 1.0370 and then rebounded. As of writing, it trades at 1.0415/20, off lows but still down more than 50 pips. It is the first daily decline after rising during five consecutive days.

The ECB announced the end of net purchases under the APP programme on 1 July and that they intend to raise interest rates by 25bp in July. For September, the ECB kept the door open to a larger hike depending on data.  The euro weakened even as German bond yields soared to the highest level since 2014.

“The SNB (Swiss National Bank) has sent out initial signals that it, too, is prepared to raise interest rates in the foreseeable future. First, however, it is likely to be the ECB's turn, which should support EUR/CHF. But only moderately, because the SNB is also likely to initiate the interest rate turnaround in September”, explained analysts at Commerzbank.

Technical levels