EUR/CHF on track to peg level as markets take Euro to the brink due to Ukraine crisis

• EUR/CHF is on its way to parity as the euro slides lower.
• The US NFP data was very strong, as expected, sending the US dollar to new highs.

The EUR/CHF has made a new low at 1.0025 thanks to the stellar US Non-Farm Payrolls report which has propelled the dollar to a new high and sent the euro into the abyss where it touches 1.0885 against the US dollar, breaking 1.0900.

The US jobs data came in as follows:

Nonfarm payrolls for February: 678,000 (423,000 estimated; 467,000 prior).
US Unemployment Rate February: 3.8% (est. 3.9%; previous 4.0%).
US Average Hourly Earnings (Y/Y) February: 5.1% (est. 5.8%; previous 5.7%).
US Average Hourly Earnings (M/M) February: 0.0% (est. 0.5%; previous 0.7%).

DXY is now trading around daily highs of 98.916 as markets price in a Federal Reserve rate hike. However, the week is also ending on a risk-off note and this is crushing the Euro.

“Now there is really nothing in the way of support until the April 2020 low near 1.0725 and then the March 2020 low near 1.0635,” analysts at Brown Brothers Harriman said.

In terms of the Fed, analysts said, “given the heightened uncertainty surrounding the Ukraine crisis, we think 50 bps would simply be too aggressive at this point. WIRP suggests zero probability of a 50 bps move and therefore the Fed does not have to feel like it has to do 50 bps to match market expectations,” analysts at Brown Brothers Harriman said.

“The Fed can then wait almost two months until the FOMC meeting on May 3-4 to see how the crisis has impacted the US economy before deciding on its next move. If circumstances warrant, the Fed could always move within the meeting, but that seems unlikely at this point.”

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