- EUR/CHF is under intense selling pressure in reaction to the SNB’s surprise rate hike of 50 basis points.
- The strength of the dollar weighs on the common currency and put some pressure on the cross.
- Acceptance below the 1.0200 round level would be seen as a new trigger for the bears.
The crossing EUR/CHF has seen aggressive selling during the European session on Thursday and has plunged about 250 pips from a daily high in reaction to a surprise change in stance by the Swiss National Bank. At time of writing, the cross is trading at 1.0200, just a few pips above a minimum of two months touched in the last hour.
The SNB surprised investors with a 50 basis point rate hike and left the door open for further hikes to counter rising inflationary pressures. This, in turn, gave a strong boost to the Swiss franc and put strong downward pressure on the EUR/CHF cross. The downward trajectory was further accelerated after SNB Chairman Thomas Jordan said in the post-meeting press conference that the swiss franc was no longer highly valued due to the recent depreciation.
On the other hand, the common currency came under pressure from resurgent demand for the US dollar and nervousness over fragmentation risks. It should be remembered that the European Central Bank handed over on Wednesday any new support measure for the bloc’s highly indebted nations. The ECB issued an unconvincing statement stating that would apply flexibility to PEPP reinvestments. This further weighed on the Euro and contributed to the strongly sell-off tone surrounding the EUR/CHF cross.
With the last move down, the cross appears to have confirmed a short-term bearish break through horizontal support at 1.0230. Acceptance below the 1.0200 round level will reaffirm the negative bias and pave the way for a further move down. The EUR/CHF cross could then accelerate the decline to challenge the psychological level of 1.0100.
EUR/CHF technical levels
Source: Fx Street
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