Thursday May 14, 2020 - 16:31:36 GMT
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Inside Forex: How the Swiss National Bank Impacts EURUSD Trading
Intervention in the forex market by the Swiss National Bank is not news. It has been doing so for as long as I can remember in an effort to limit strength in the CHF,
Anyone who was trading in January 2015 remembers the carnage in the forex market caused by the SNB abandoning its defense of EURCHF 1.20. The resulting flash crash is just a memory now but the ramifications both then and now are still being felt in the market.
What is the SNB up to now?
The following was posted by a highly respected member of the Global-View Forex Forum on May 14, 2010. While there is no way to verify the SNB’s actions, iy makes logical sense to explain the recent choppy, whipsaw price action in EURUSD.
Thursday Amazing Trader 14 May 2020
london red 13:40 GMT 05/14/2020
cable. prev key low 12164 but still some way off 1.20 below which suggests much lower. likely to be combined with usd shortage. also watch eurchf. snb is printing tons of chf which it sells by buying euro which are then sold via eurusd into usd and that ends up in amazon apple and so on. hence all eurusd bounces are slight given snb dumps its euros as some as it can. it will never sell the lows but rather sell blips, hence euro unable to break lower convincingly but at same time clobbered at first sign of a bounce. the 1.05 in eurchf should be treated as a mini 1.20 floor. there could be some carnage below if broken.
To sum up:
- SNB appears to be defending EURCHF 1.05 (beware)
- Intervention: sells CHF => buys EUR => sells EURUSD bounces => invests USD in US stocks
The following is a 4 hour EURUSD chart courtesy of the Amazing Trader. Note the Amazing Trader blue lines indicating momentum to the downside and the 1.0666 red line that is currently being pivoted with 1.05 (and the SNB?) looming below.
Feel free to visit the forex forum and express your views and/or comment on what the SNB may be up to.
Jay Meisler
[email protected]
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