EUR/CHF: SNB Kept Negative Rates On Hold
Growth Aces | Mar 16, 2017 08:01AM ET
EUR/CHF: SNB kept negative rates on hold
Macroeconomic overview
The Swiss National Bank kept its target range for three-month Swiss franc Libor at -1.25% to -0.25% and the rate it charges on sight deposits at -0.75%.
The SNB reiterated its vow to intervene on currency markets when needed to rein in the franc, which it said remained "significantly overvalued". The SNB kept its forecast for the export-led Swiss economy to grow around 1.5% in 2017, but lifted its inflation forecast to 0.3% from 0.1%.
The SNB has been stepping up attempts to weaken the franc as the currency has attracted safe-haven flows from investors concerned by the potential break-up of the Eurozone. The French election starting next month has been driving demand for the Swiss currency, with anti-EU candidate Marine Le Pen leading polls ahead of the first round, although she is not expected to win the French presidency. The success of Dutch Prime Minister Mark Rutte over anti-EU candidate Geert Wilders in Wednesday's Dutch election offered some relief to governments across Europe facing a wave of nationalism.
Technical analysis
The neutral SNB statement supported the Swiss franc and the EUR/CHF has lost all it gained after yesterday’s Fed decision. The EUR/CHF remains above 14-day exponential moving average, which is still positively aligned. On the other hand, the rejection of upward trend on March 13 weighs on the market. The nearest support levels are 1.0691 low on March 9 and 1.0688 low on March 8. A close below these levels may open the way to full retracement of February-March rise.
Trading strategy
We stay EUR/CHF long at 1.0710. We think that latest data from the Swiss economy do not allow for thinking about removing of the monetary accommodation. On the other hand, the speculations on interest rate hikes in the Eurozone are likely to strengthen.
Source: GrowthAces.com - your daily forex trading strategies newsletter
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