No breakout for EUR/CHF just yet

The pair moved up to contest its 200-day moving average (blue line) in January but sellers held on at the time. And this week, we’re seeing more of the same stuff. There was an attempt to break above the key technical level yesterday and earlier today but it looks like buyers are not finding enough conviction just yet.

A more positive risk appetite is helping, as Trump looks to be using tariffs as a negotiating tactic more so than any real “all hell breaks loose” scenario. Besides that, he also looks to be playing the mediator in the Russia-Ukraine conflict – or at least that’s how it looks from the outside here.

The latter in particular will be rather interesting for EUR/CHF in my view.

When Russia invaded Ukraine in February 2022, the pair was trading around 1.0600. That saw a major drag on the pair towards 0.9400 by September 2022, among other factors of course; not least with the SNB also hiking rates at the time.

While the impact of the Russia-Ukraine conflict might have faded over time in markets, any positive developments there shouldn’t be understated.

It will be a major weight lifted over risk sentiment in Europe, even if the overhang isn’t as bad in the last two years. I’m not opposed to a risk rally, more so than what we’re already seeing in European stocks to start the year. But in the case of EUR/CHF, it could provide the right kind of technical trigger for the pair to come up for a bit of air.

The pair has been testing waters around 0.9300 since December 2023 and so far, there’s no major crack of the key level just yet. That could provide some opportunity for a bit of relief amid some good news.

But at least for now though, as we await that potential development, there’s still no real breakout for the pair just yet. However, as mentioned above, it perhaps is one worth keeping an eye out for.

This article was written by Justin Low at www.forexlive.com.