November 28, 2021
  • November 28, 2021

EUR / CHF largely oversold, EUR / GBP against post-Brexit line

By on November 2, 2021 0

Analysis and news EUR / CHF, EUR / GBP

  • SNB increases currency activity as EUR / CHF approaches the line in the sand
  • EUR / GBP rally persists, despite easing tensions between UK and France

EUR / CHF: The cross is currently trading at its lowest level since May 2020 after breaking firmly below the 1.06 handle. As such, given that EUR / CHF is not far from the line in the sand at 1.05, where the Bank intervened aggressively during the height of the Covid crisis. It is likely that the SNB will step up its interventions to slow the appreciation of the franc. Yesterday’s sight deposit data provided evidence of an increase in foreign exchange interventions as they increased by CHF 1.8 billion. However, while this is the biggest rise since May 2021, it pales in comparison to the intervention of March-April 2020. At the same time, this notion that the Swiss franc is a hedge against the Inflation provided a tailwind for the currency, which in turn suggests that EUR / CHF rallies may find it difficult to maintain a position above 1.0650. Technically, the daily RSI shows that the pair is deeply oversold and therefore chasing the move lower from current levels is unattractive.

SNB increases currency activity as EUR / CHF approaches the line in the sand

IG client sentiment warns EUR / CHF could reverse to the upside

Data shows that 70.73% of traders are net long with a ratio of long traders to shorts of 2.42 to 1. The number of net long traders is 5.75% higher than yesterday and 0.90 % lower than last week, while net-short traders count is 25.69% higher than yesterday and 38.38% higher than last week.

We generally take a contrarian view of crowd sentiment, and the fact that traders are net long suggests that EUR / CHF prices may continue to fall.

However, traders are shorter than yesterday and compared to last week. Recent sentiment shifts warn that the current EUR / CHF price trend may soon reverse upward despite traders staying net long.

EUR / GBP rally persists, despite easing tensions between UK and France

EUR / GBP: As the conflict between the UK and France continues, tensions have eased slightly after French President Macron withdrew from his threat to impose retaliatory measures on the UK. However, despite this, the EUR / GBP continued to climb with the pair testing the 0.8500 grip. The fact remains that the British fishing vessel seized in France remains detained at the port of Le Havre at least until the hearing tomorrow and there is therefore a risk that tensions will worsen. That said, further gains will be harder to come by with upside resistance in the form of the 50 (0.8524) and 100DMA (0.8536) ahead.

EUR / GBP Chart: Daily Period

EUR / CHF largely oversold, EUR / GBP against post-Brexit line

Source: Réfinitiv

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