Analysis of the EUR/CHF Pair: The Euro stabilizes below the 100-day EMA with an eye on the 0.9400 barrier

• EUR/CHF rebounds for the second consecutive day after a three-day decline earlier in the week.
• The crossover is quoting just below the 100-day EMA, with resistance at the psychological mark of 0.9400.
• The demand for the Swiss Franc continues to limit the Euro's upside potential, keeping the exchange rate in consolidation.

The EUR/CHF pair attracts buyers this Friday, extending gains for the second consecutive day after a three-day decline earlier in the week. The cross is trading near 0.9358 at the start of the American session, remaining just below the 100-day Exponential Moving Average (EMA). The overall picture shows the pair locked within a multi-month consolidation pattern, with 0.9275 acting as the floor of the range and 0.9450 serving as solid resistance.

Momentum indicators remain largely neutral, consistent with the limited range structure. The Relative Strength Index (RSI) currently sits at 48, indicating a lack of conviction in the market direction. A move above 55 would strengthen the bullish momentum, while a drop below 45 could pave the way for greater losses.

The Moving Average Convergence/Divergence (MACD) remains close to the zero line, with the MACD line slightly above the signal line. The histogram bars are decreasing, reflecting a loss of recent bearish pressure but without a strong bullish confirmation. This setup highlights the market's indecision, although a clear push above zero would confirm bullish momentum, while a pullback below the signal line could revive bearish pressure towards the bottom of the range.

On the bearish side, immediate support emerges at the weekly low near 0.9320, followed by the lower end of the current range around 0.9275. A break below these levels could reinforce the strength of the CHF and expose the level 0.9200. On the bullish side, initial resistance is located at the 100-day EMA near 0.9373, followed by the weekly high at the psychological mark of 0.9400. A decisive close above that zone would shift the focus towards 0.9450, the upper limit of the recent consolidation.

Frequently Asked Questions about the Swiss Franc

What key factors drive the Swiss Franc?

The Swiss Franc (CHF) is the official currency of Switzerland. It is among the ten most traded currencies globally, reaching volumes that far exceed the size of the Swiss economy. Its value is determined by the overall market sentiment, the economic health of the country, or actions taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was linked to the Euro (EUR). This link was abruptly removed, resulting in an increase of more than 20% in the value of the Franc, causing turbulence in the markets. Although the link is no longer in effect, the fortunes of the CHF tend to be highly correlated with those of the Euro due to the significant dependence of the Swiss economy on the neighboring Eurozone.

Why is the Swiss Franc considered a safe-haven currency?

The Swiss Franc (CHF) is considered a safe haven asset, or a currency that investors tend to buy in times of market stress. This is due to Switzerland's perceived status in the world: a stable economy, a strong export sector, large central bank reserves, or a long-standing political stance of neutrality in global conflicts make the country's currency a good choice for investors fleeing risks. Turbulent times are likely to strengthen the value of the CHF against other currencies that are perceived as riskier for investment.

How do the decisions of the Swiss National Bank affect the Swiss Franc?

The Swiss National Bank (SNB) meets four times a year – once each quarter, which is less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above the target or is expected to be above the target in the foreseeable future, the bank will try to contain price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher returns, making the country a more attractive place for investors. Conversely, lower interest rates tend to weaken the CHF.

How do economic data influence the value of the Swiss Franc?

Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the valuation of the Swiss Franc (CHF). The Swiss economy is broadly stable, but any sudden changes in economic growth, inflation, the current account, or the central bank's foreign exchange reserves have the potential to trigger movements in the CHF. Generally, high economic growth, low unemployment, and high confidence are good for the CHF. Conversely, if economic data points to weakened momentum, the CHF is likely to depreciate.

How does the Eurozone's monetary policy affect the Swiss Franc?

As a small and open economy, Switzerland relies heavily on the health of the neighboring economies in the Eurozone. The European Union as a whole is Switzerland's main economic partner and key political ally, making macroeconomic and monetary policy stability in the Eurozone essential for Switzerland and, therefore, for the Swiss Franc (CHF). Given such dependence, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is over 90%, or nearly perfect.