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- The euro initially plunged during trading on Monday but has seen a significant turnaround.
- At this point in time I'm watching some technical analysis come into the picture and perhaps offer glimmers of hope for the euro against the Swiss franc.
- While the ECB and the European Union face significant challenges at the moment, the Swiss economy remains heavily reliant on Europe, with approximately 80–85% of its exports directed to the EU, leaving Switzerland largely at the mercy of its neighboring economies.
That means people are trying to get away from Switzerland. They're trying to get away from Europe as well, but this is a relative trade. The 0.9450 level above is a significant resistance barrier, and it also has the 200-day EMA sitting there as well. If we can clear that, then it would be a very bullish sign for this pair as we have just tested a fairly significant support level near the 0.9250 level. Clearing the 200-day EMA to the upside could open up a move all the way to the 0.9750 level based on market memory and the way the market has behaved in the past.
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The fact that the candlestick on Monday looks a lot like a hammer suggests to me that there are buyers out there willing to get involved if and when the opportunity arises. I think ultimately this is a scenario where the euro is weak, but the Swiss franc is just a little bit weaker. If you really want to know the difference between the two, pull up the euro against the dollar and then the dollar against the Swiss franc. You'll see how both of these currencies are acting in a relative strength basis once you compare the two charts. At this point, I'm bullish, but I need to see the resistance barrier above get broken to get long.
EURUSD Chart by TradingView
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