Scanning through my DJ Newswire this morning I have spotted five reports about the EURCHF, with commentary from Landesbank, Credit Agricole, Daiwa Institute of Research, & Commerzbank. With the SNB heads speaking yesterday, and the EURCHF trading below 1.4300, speculation has increased about what the direction for the pair will be.
Basically, all four banks expect the EURCHF to decline to 1.4000 as there isn’t much in the way of support until those levels, and they also have pointed out that the Forex markets have completely ignored the statements from the SNB and are waiting for real actions rather than simple rhetoric. The idea makes sense since the EU and Swiss economies appear to be travelling in opposite directions.
However, with short selling taking place, and seemingly no one believing that the EURCHF will move higher my Contrarian Hat says we may be gearing up for a bounce in the pair. I don’t advocate to “Back up the Truck,” but a small trade could work out here. Also, if the SNB is spotted in the market, I would expect short term traders to be covering quickly. The long term players will probably be selling into any rally, by my view is that more and more, we are seeing new sellers in the pair appear.
Disclosure: Long EURCHF