In a number of videos over the past 3 months we have looked at the EUR/CHF with a view to possible upside in that cross pair due to Swiss National Bank (SNB) intervention.
In the past, the SNB has made it public that it will intervene in this pair at around the 1.20 level, to prevent it falling below that level (remember as the pair has the EUR firs a rise in this currency is a relative decrease in the CHF helping Swiss exporters).
This public statement, and history of intervening, makes the 1.20 level a historical bottom in this pair since September 2011 as shown in the chart below. With the Swiss Bank “protecting” this pair, traders generally are happy taking a punt on the upside at about the 1.2 level, close to where the pair currently is. As more and more traders get on the band wagon, less intervention will be required by the bank. Most traders out there certainly have significant reservations in short-selling the pair with the SNB looking over their shoulders.
The SNB have seen it important to intervene against the EURO to protect Swiss exporters from losing a competitive price advantage when dealing in nearby European territories.
So it seems the price is diverging to the critical level again where intervention is a possibility.
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