Some traders report there are no stops in USD/CHF below 1.2250 while others tip a break sub-1.2250 to put spot on the path towards stop-loss city. Either way the latest stab lower in USD/CHF has sparked the pair to life with renewed buyers emerging below 1.2260 (1.2254 the low according to EBS). As a result the price is looking to bounce but selling into bounces is likely to be preferred going forward.
The impending SNB meet (Thursday) and the buying back of the Swiss Franc, amid the Countrywide and New Century Financial inspired worries, should help cap spot into 1.2280. Into North American trading and EUR/CHF has been forced to act as a pressure value to relieve the tension as EUR/USD remains capped ahead of the 1.3200 option triggers. With the Franc rallying and the Euro caged the cross has been forced lower and the option strikes at 1.6125 are fast coming into view.
The break below 1.6150 has seen stops removed but option related buying (ahead of the expiry) combined with the USD/CHF bids should help stall the move lower. Elsewhere, the expectations for an SNB hike later this week will do little to boost the Franc over the medium-term. Any such SNB hike will more than likely be followed by a further ECB rate rise therefore spreads are unlikely to be altered massively into Q2.
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