Swiss Franc Positioning Extreme, Where is SNB?

The Euro has struggled recently not only against the US dollar, but also against the Swiss franc. The EURCHF pair traded towards the 1.2050 level recently, and barely managed to hold it. We all know that the Swiss National Bank has placed a floor at 1.2000 in the EURCHF pair. The positioning in the pair is getting extreme day by day, and there is a major risk of a sharp bounce in the short term.

We need to see how the Swiss franc buyers react if the pair moves lower from the current levels. There were some statements from the SNB recently stating that they might consider negative rates if this goes on. There was an important release during the London session yesterday, which had a minor impact on the Swiss franc. We must also not forget that the EURCHF is largely dependent on how the Euro performs, and we all know that it has done badly during the last couple of months. As a result, the EURCHF pair has traded lower as well.

Swiss Trade Balance Data
As mentioned, there was an important release in Switzerland. The Swiss imports, exports and trade balance report was released by the Federal Customs Administration. The market’s expectation was on the higher side this time, as the forecast was of a trade surplus of 2,646M, compared to the last time surplus of 1331M. However, the outcome was a touch lower than expectated, as the Swiss trade balance registered a surplus of 2452M. Moreover, the previous reading was revised down from 1386M to 1331M. The outcome was not as expected, but overall it was on the positive side.

The Swiss imports increased from the previous revised reading of 13560M to 15070M. Similarly, the Swiss exports increased from the previous revised reading of 14891M to 17523M.

We must not forget that the Swiss trade balance figure impacts the EURCHF pair to a great extent. You can analyze it in the chart attached above from Vox. A stronger Swiss franc might dent the Euro zone trade balance as can be seen in the chart above.

Moving Ahead
There is no other major release lined up in Switzerland this week, so the price action in the EURCHF pair would mostly depend upon the incoming data in the Euro zone. There are a couple of releases like manufacturing and services PMI, which might impact the Euro in the short term. Let us see how the EURCHF pair reacts around the mentioned releases.

Technically, the EURCHF pair has a major support around the 1.2050 level, which might act as a strong hurdle for the Euro sellers. Any further downside might see buyers around the 1.2030-35 levels. On the upside, the 1.2080 is an immediate hurdle for the EURCHF pair. It has to break the mentioned resistance area for more gains in the short term.

So, keep an eye on all the important levels friends and trade accordingly.

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