The Swiss Franc has been strong due to its safe haven status. However, that strength has now forced the hands of the SNB to effectively peg the exchange rate at 1.20 Swiss Franc per Euro and defend that level with determination. This shot the EUR/CHF from 1.1040 levels to 1.2190 levels before stalling around 1.2040 heading into the Tuesday US session. This is an incredible 1000+ pips in the span of 3 hours.
The USD/CHF jumped almost 700 pips in the forex market's reaction to weaken the Swiss Franc. From a narrow range around 0.7880, it rallied to 0.8570 by the Tuesday US session.
CHF/JPY tanked from the 97.80 levels to 90, 780 pips.
As we enter the US session, the market will have a sharp move to digest. Will it treat this as any other intervention and put back Swissie strength? If not the CHF, where will the market look for safe haven. What currencies stand to gain from this?
If the SNB has successfully capped the CHF, the JPY, USD and gold might stand to gain as they are also competitors for the safe-have flow.
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Fan Yang CMT
Chief Technical Strategist