EURCHF Attempts a Rebound


The EURCHF currency pair witnessed a compelling surge during Wednesday’s trading, marking a 32 basis point uptick to halt a two-day decline. This surge unravelled against the backdrop of shifting sentiments surrounding safe-haven currencies, notably as the Swiss Franc lost traction amidst a broader market shift towards riskier assets. 

The Federal Reserve’s decision to pause interest rates and its dovish stance triggered this shift, impacting not only the US dollar but also safe-haven currencies like the Swiss Franc. Subsequently, the Swiss National Bank (SNB) maintained its anticipated interest rate pause at 1.75%, a move coinciding with Switzerland’s inflation registering a significant slowdown, dropping to 1.4%—30 basis points below October’s figure and notably beneath the country’s ceiling. 

Attention now swivels toward the European Central Bank (ECB), poised for its interest rate decision today. Market expectations lean towards the ECB maintaining its interest rate at 4.5%, reflective of its success in taming inflationary pressures. 

An intriguing aspect surfacing from this landscape is the potential influence of interest rate differentials on the EURCHF pair. With higher interest rates prevailing in the Eurozone compared to Switzerland, shifts in risk appetite might favour the Euro against the Swiss Franc, creating a pivotal dynamic influenced by diverging monetary policies.  


The EURCHF currency pair has embarked on a fascinating journey, poised for a potential second consecutive positive week after navigating through recent fluctuations. A setback emerged as the Euro weakened, propelling the pair below its critical 100-day moving average and initiating a downtrend. 

Amidst this descent, a support level materialized at the 0.94172 level, underpinned by oversold conditions on the Relative Strength Index (RSI). This support set the stage for an impressive surge in price action, briefly halting at the 0.96838 resistance before a sharp downturn ensued, precipitating a nearly 2% plunge three weeks ago. 

The pair’s retracement to retest the support encountered opposition, echoing the dynamics of the initial formation of this support level as demand outweighed supply at the price level. As a potential reversal takes shape amid oversold RSI conditions, market attention could centre on the 50% retracement level, a potential short-term point of interest, should upward momentum persist. Conversely, should market sentiment tilt towards renewed downward momentum, the 0.94172 support level could resurface. 


The EURCHF’s recent bounce, triggered by shifting sentiments in safe-haven currencies amid a dovish Fed and SNB’s stance, hints at a potential uptrend. The reversal from support at 0.94172 could bring the 50% level into the spotlight. 

Sources: Federal Reserve, Swiss National Bank, Reuters, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

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