Central Bank Actions Give Euro Edge over Swiss Franc

Fundamentally the consensus is the Euro isstronger than the Swiss Franc. The Euro rose on Wednesday on the thought thatthe European Central Bank may be getting ready to implement a tighter monetarypolicy.

Fundamentally the consensus is the Euro is stronger than theSwiss Franc. The Euro rose on Wednesday on the thought that the EuropeanCentral Bank may be getting ready to implement a tighter monetary policy. Thisconclusion was supported by comments from European Central Bank Executive Boardmember Juergen Stark who said an easy monetary policy can have negativeeffects.

The Swiss National Bank on the other hand wants to see aweaker Swiss Franc because of concerns that a stronger currency will hurt itseconomy. After several attempts to weaken its currency through actual andverbal intervention, earlier this month the SNB may have actually accomplishedwhat they wanted when it cut its inflation outlook through 2013.

Hints of a tighter monetary policy from the ECB and anunlikely interest rate increase from the SNB confirm that both central banksare moving in opposite directions. This conclusion is also being supported bythe developing bullish EUR CHF pattern program.

Technically, the Euro/Swiss is running into resistanceinside the retracement zone of the 1.3923 to 1.2764 range at 1.3343 to1.3480. There is room to run higher ifthe upper level is taken out. Otherwise, this market can correct back to 1.3128to 1.3042 where value buyers will likely be waiting.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More