Usually markets are driven by the diametrically opposed emotions of greed and fear. In the case of EUR/CHF, the only emotion at play for the last two and a half years have been fear and fear: Fear of a collapse of the euro which in recent days has turned into the fear that the euro won’t collapse.
It seems odd that it has taken more than five months for Draghi’s “whatever it takes” message to take effect as far as the Swiss franc is concerned. Shouldn’t the franc have fallen a lot sooner, given the sharp contraction in periphery spreads? It stands to reason, but only the imposition of negative interest rates by the Swiss banks has been able to stem the tide and finally turn it.
Large barriers at 1.25 are coming into view amid miserable liquidity in the cross. We’ve been as high as 1.2341 from below 1.2200 in Asia overnight. 1.2440/80 is resistance along the way.
