EUR/CHF climbs back above 1.1300
The SNB offset the fact that it maintained the language on the Swiss franc as “highly valued” by lowering its inflation forecasts for 2019 and 2020 while also putting a mildly softer spin on economic growth saying that “the pace of growth is expected to slow slightly”. So far, that’s enough to keep the franc from pulling off any further gains seen in recent times.
The tweak in inflation forecasts also adds further justification that the central bank won’t act before the ECB does next year but it doesn’t really change the picture a whole lot. Apart from the dovish tweaks, I’m struggling to find a reason why the swissie won’t resume its uptrend against the euro for the foreseeable period ahead.
With the SNB unwilling to provide any verbal intervention, the only option they have now is to step into the market to do so. And so far there hasn’t been any real suggestions of them actually coming into the market to temper with the franc’s gains in the second half of this year – despite the fact the statement said that they “will remain active” in doing so.
However, the further the swissie runs the higher the risk is of the SNB actually stepping back in. But if today is any indication, is that they’re still comfortable with the swissie sitting around 1.12 to 1.14 against the euro.
And if EUR/CHF is unable to find a way past the resistance trendline above, a retest of 1.1200 appears to be on the cards in the medium-term.