TOPICS COVERED IN THIS ANALYSIS OF THE EUR / CHF PAIR
- Latest meetings of major central banks (SNB and ECB)
- EUR / CHF: the euro stabilizes in a support zone
Latest meetings of the main central banks (SNB and ECB)
The Swiss National Bank on Thursday kept its monetary policy unchanged and issued moderate inflation forecasts. But in the face of the global acceleration in prices, major central banks like the Fed and the ECB have started to tighten the screws. La NBS a renews its ultra-accommodative monetary policy. The key rate and the negative interest rate applied to assets have been kept at –0,75%.
The central bank also remains ready to intervene in the foreign exchange market as needed to ease upward pressure on the franc.. Swiss currency, a safe haven sought after in times of crisis, has appreciated significantly since the start of the year, putting Swiss exporters under pressure
Thomas Jordan, however, conceded the difficulty of interpreting the evolution of exchange rates due to the differential in inflation rates between Switzerland and abroad. But the SNB believes that the Swiss currency is still “at a high level”.
The Swiss National Bank is raising its inflation forecast for 2021, due to the rise in import prices of petroleum products and goods affected by supply difficulties. Inflation forecasts are set at 0.6% for 2021, 1% for 2022 and 0.6% for 2023.For 2022, the SNB forecasts Swiss GDP growth of around 3%.
Concerning the euro zone, thehe European Central Bank has announced a further reduction in its support for the economy but has promised to continue to promote the recovery in 2022 while confirming that inflation is expected to fall below its target, which in its view justifies the maintenance of a very accommodating policy.
The ECB has revised upwards its inflation forecasts but lowered its growth forecast for 2022: the rise in prices should remain above its target of 2% this year and next year before falling below this threshold in 2023 and 2024.
With the euro zone economy having returned to its pre-COVID-19 level, pressure is mounting on the ECB to follow in the footsteps of central banks which have started to very partially close the credit tap, starting with the US Federal Reserve and the Bank of England.
But its leaders fear that a too rapid tightening could cause inflation to fall back far from the target it has set, especially since the emergence of the Omicron variant of the coronavirus risks slowing down activity.
EUR / CHF: the euro stabilizes in a support zone
On the graphic side, the euro has stabilized for a few sessions after having experienced a heavy fall against the Swiss franc. The technical setup remains bearish, but buyers are trying to preserve the support area towards CHF 1.04.
Additionally, prices have recently validated a bullish divergence on RSI, so this structure suggests a near term bullish recovery. For now, the pair is blocking below CHF 1.0450, however crossing this level should lead to an acceleration towards CHF 1.0505 close to the 50 period moving average.
We estimate always whatand context economy does not favor a bullish recovery in order to reverse the trend. However, the decline seems limited and the SNB stands ready to intervene in the foreign exchange market. Thus, EUR / CHF could start a stabilization phase within a range. Consequently, a consolidation between CHF 1.0505 and CHF 1.04 cannot be ruled out for the coming weeks.
EUR CHART /CHF IN DAILY DATA
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