The euro extends the upturn in forex with a bellicose ECB
The breakout technique of the EUR/CHF pair indicates further upside potential in forex for the Euro against the Swiss Franc.
The euro appreciated in forex first thing this morning on an otherwise calm day. The single currency found new support after being hit last week by reports European Central Bank officials were eyeing a slower-than-expected rate of rise, with the idea of a slower move in March “gaining support”. Well, that 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 the interest rate by 50 basis points in February and March and continue to raise the rate thereafter. A week later, ECB President Christine Lagarde had said a similar thing. Consequently, the euro crosses found support, the pairs EUR/GBPEUR/JPY and EUR/CHF all-round winners.
Among the Euro pairs, the EUR/CHF pair seems to me the most interesting pair after breaking out of a tight consolidation range last week, before rising sharply and then crashing following this report of the “ECB sources”. After the new hawkish comments, EUR/CHF is back on the upside as it held support at the former resistance area near 0.99. Today, it is above parity. The path of least resistance therefore remains to the upside until something has chosen to fundamentally change.
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 signaled that they are rate managers three times in 2022 and analysts are aware that rates are rising to the new level from the current level of 1%, which SNB Chairman Thomas Jordan will understand at to sell. stating that tackling inflation and ensuring price stability is “absolutely essential”. Yet the SNB appears to have one of the lowest interest rates in the world, which should discourage investors from placing their funds at the ECB.
By Fawad Razaqzada, FOREX.com » Official Site
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