Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🌊 NVIDIA ripple effect: Track AI stocks' response to chip giant's earnings
Explore AI Stocks
Enormous Triangle Forms On EUR/CHF Chart
www.investing.com/analysis/enormous-triangle-forms-on-eur-chf-chart-221786
Enormous Triangle Forms On EUR/CHF Chart
By Blackwell Global (Ross Woodfield) | Aug 06, 2014 02:25AM ET Over the last 18 months a huge triangle has formed between the Euro and the Franc. With a price floor in place, a breakout lower for the EURCHF will not be going any lower than 1.20, however, a breakout higher could be large.
In early 2013, the EURCHF pair was extremely volatile as the EU emerged from the sovereign debt crisis that threatened to break up the Euro zone. At the peak of the crisis the price floor at 1.2 Euros per Franc between the two was put to the test as capital fled the EU for the safety of the Swiss Alps. The Floor was put in place by Switzerland’s central bank (the SNB) to combat falling inflation. Since interest rates were already at zero, they saw the price floor as the most appropriate strategy to prevent deflation by keeping the currency artificially weak and therefore imports artificially high. The SNB even pledged to “defend the floor with unlimited reserves”.
Once confidence returned the capital outflows led to extreme volatility between the pair which has slowly been diminishing. The stimulus in the EU has led to the descending bearish trend as the return differential between the two currencies diminishes. Also at the first signs of a crisis the pull of the ‘safe haven’ title the Franc affords leads to capital outflows from the Euro zone.
If we see more stimulus from the ECB, which is a distinct possibility given the falling inflation rate has fallen to just 0.4%, we will see a breakout of the support that forms the bottom of the triangle around 1.2132. The ECB is meeting at the end of this week, so we will know where they stand by then. A movement lower will be cut short by the price floor at 1.2000, making it a 132 pip movement at maximum. From here, it’s a pretty safe long given the stance of the SNB and their “unlimited reserves”.
A breakout to the upside is a possibility if inflation returns to the EU. We are seeing some positive signs in the form of Services PMIs from Germany at 56.7 and France at 50.4, and also Spain’s unemployment rate coming down to 24.5% along with the EU wide unemployment falling to 11.5%. Furthermore, it looks like the Swiss economy is feeling a bit of stress with the KOF economic barometer falling to 98.10 from 100.50, however we will know more by the end of the week when Swiss CPI and Unemployment is reported.
Related Articles
3 Good Reasons to Be Bullish on the US Dollar
By Francesco Pesole - Feb 27, 2025
1
The US dollar has come under some pressure on the back of the rerating of the US growth outlook and expectations that the Russia-Ukraine conflict is nearing an end. However, we...
USD/JPY Declines as BoJ Core CPI Climbs to 2.2%
By Kenny Fisher - Feb 26, 2025
The Japanese yen is slightly lower on Wednesday. In the North American session, USD/JPY is trading at 148.92, down 0.07% on the day. What is the best performing G-10 currency...
USD/JPY Consolidates as Yen Strength Stalls Near Highs
By Andrey Goilov - Feb 27, 2025
USD/JPY is consolidating near 149.33 on Wednesday, with the yen pausing its rally while holding near four-month highs against the USD. This stabilisation follows renewed support...
Enormous Triangle Forms On EUR/CHF Chart
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.