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EUR/CHF: Euro extends its forex recovery with a hawkish ECB

Euro continues to rally in forex with a hawkish ECB

The EUR/CHF technical break indicates further upside potential for the euro against the Swiss franc.

Euro rose on forex first thing this morning on a calm day. The single currency found new support after it was hit by reports last week that European Central Bank officials expected slower-than-expected growth, and the idea of ​​a slower move in March “gained support.” Well, this report has been challenged by new hawkish comments from ECB officials. This morning, for example, Governing Council member Klaas Knot said the ECB would raise interest rates by 50 basis points in February and March and continue raising rates thereafter. A week earlier, ECB President Christine Lagarde said the same thing. As a result, the euro crosses found support, while the EUR/GBP, EUR/JPY and EUR/CHF gained strength.

Among the euro pairs, EUR/CHF seems to me the most interesting pair after breaking through a narrow consolidation range last week, before rising sharply and then crashing after this ECB sources report. But after further hawkish comments, the EUR/CHF is rising again, maintaining support in the former resistance zone around 0.99. Today it is above parity. So the path of least resistance stays up until something fundamentally changes.

Source: Tradingview, Stone X

The Swiss National Bank is one of the least hawkish central banks thanks to relatively more stable inflation in Switzerland compared to the rest of the world last year. The SNB has tightened its key rate three times in 2022, and analysts expect rates to rise again from the current 1% level, as SNB chairman Thomas Jordan hinted on Friday when he said fighting inflation and ensuring price stability was “absolutely essential.” However, the SNB appears to have one of the lowest interest rates in the world, which should discourage investors from placing their funds with the ECB.

Text: Fawad Razaqzada, FOREX.com » Official site

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Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no liability for any direct, indirect or consequential damages that may result from anyone relying to such information.

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