[Abort +0 pips] EUR/CHF Strategic Trade Plan
06/05/2024 As the price of the pair climbed back towards its entry, the trade was aborted with 0 pips profit.
Defining Value and Recent Boundaries
So, where does EUR/CHF sit right now? Looking at recent price action and what's been driving things fundamentally, it seems the "fair value" range has likely been somewhere between 0.9250 and 0.9450. That said, volatility lately has pushed the pair to test the bottom end of that band.
Currently trading around 0.9300 (as of mid-April 2025), we've seen the pair actually dip lower recently, testing support closer to the 0.9200 level. What pushed it down? Mostly it came down to stronger global risk aversion. Things like worries over US trade policy really picked up, making the Swiss Franc a much more attractive safe haven. That force pretty much overpowered anything specific to the Euro at the time.
Compare that to just a few weeks earlier in March. Back then, the pair was actually challenging resistance closer to 0.9600. That move higher was driven by a different story: optimism about potential German fiscal stimulus boosting the Euro, plus anticipation that the SNB would cut rates, which would tend to weaken the Franc. But the market focus quickly shifted, and the subsequent fall clearly showed attention was turning instead to the actual SNB rate cut we got and those growing geopolitical worries.
Forces Shaping the Near-Term Outlook
Looking ahead over the next seven weeks or so, it feels like this fair value range for EUR/CHF will probably stay under pressure. That's because the two currencies making up the pair seem set to be pulled in different directions.
On the Euro side, there are definite headwinds. We've got that persistent uncertainty around US trade policy casting a shadow over Eurozone growth. Plus, the ECB is still actively in an easing cycle, which makes sense given these risks and their goal of bringing inflation down gradually.
The Swiss Franc, on the other hand, will likely keep benefiting from these exact same global uncertainties – it's a magnet for safe-haven flows. And domestically, its extremely low inflation situation gives the SNB plenty of breathing room for policy, really underpinning the Franc's fundamental stability.
So, when you pit worries about Eurozone growth and the ECB's accommodating stance against the CHF acting as a haven with pretty solid domestic fundamentals, it suggests a clear pull lower. We could see the pair head towards the bottom of that recent "fair value" band, or perhaps even slip below it.
Things to Keep an Eye On: The Economic Calendar
Alright, let's talk about the data coming up. Over the next roughly seven weeks, there are a few key economic indicators and events scheduled for both the Eurozone and Switzerland that could definitely move the needle for EUR/CHF. Here’s a look at the main ones, with rough forecasts where available and a quick thought on what meeting those forecasts might signal:
Apr 22: Euro Area fiscal data (Government Budget & Debt to GDP for 2024). These just give context on fiscal health. Meeting forecasts probably means little immediate EUR impact – likely neutral.
Apr 22: Euro Area Consumer Confidence Flash (Apr). If confirmed at the low forecast, this underlines weak sentiment and could slightly weigh on the Euro.
Apr 23: Euro Area HCOB PMI Flash surveys (Apr) for Composite, Manufacturing, Services.
Composite (Forecast: 50.3): Hitting this modest growth forecast offers minimal support, unlikely to change the overall EUR outlook much.
Manufacturing (Forecast: 47.9): Continued contraction as forecast? That just underlines how weak manufacturing is – not good for the Euro.
Services (Forecast: 50.5): A slight expansion as expected would be a minor positive for EUR, but most attention will remain on manufacturing and the bigger growth picture.
Apr 23: Euro Area Balance of Trade (Feb). A surplus as forecast is good on paper, but the market seems more focused on future trade risks, potentially muting any EUR boost.
Apr 29: Euro Area Economic Sentiment (Apr). Matching the low forecast here really highlights the prevailing pessimism, likely bearish for the Euro.
Apr 30: Switzerland KOF Leading Indicators (Apr). A reading close to last month's solid level could quietly support CHF stability.
Apr 30: Euro Area GDP Growth Rate Flash (Q1) for QoQ (Forecast: 0.20%) and YoY (Forecast: 0.90%). Confirming near-stagnation (QoQ) and slow annual growth reinforces the sluggish Eurozone picture, pressuring the Euro.
May 01: Switzerland procure.ch Manufacturing PMI (Apr). Another month of contraction would point to industrial struggles, but it might be easily overshadowed if safe-haven flows continue to boost the CHF.
May 02: Switzerland Retail Sales YoY (Mar). Modest growth as forecast hints at some domestic resilience, offering a small bit of potential support for the CHF.
May 02: Euro Area Inflation Rate Flash (Apr) for YoY (Forecast: 2.00%), Core YoY (Forecast: 2.20%), and MoM (Forecast: 0.40%).
Hitting the 2.0% target could reinforce the idea the ECB will stick to gradual easing – tends to weigh on the Euro.
Further moderation in core inflation as expected strongly supports the ECB's easing bias, likely negative for the Euro.
A moderate monthly rise is pretty consistent with overall disinflation and seems neutral for EUR.
May 02: Euro Area Unemployment Rate (Mar). A slight forecast uptick could add marginally to concerns about the Eurozone economy, potentially negative for EUR.
May 05: Switzerland Inflation Rate YoY (Apr). If inflation stays very low, it really highlights the SNB's policy flexibility and the CHF's appeal fundamentally – potentially CHF positive.
May 06: Switzerland Unemployment Rate (Apr). If it stays low and stable, it signals domestic economic health, supporting the CHF.
May 07: Euro Area Retail Sales MoM (Mar). Weak activity as forecast just points to subdued consumer demand, a negative signal for the Euro.
May 09: Switzerland Consumer Confidence (Apr). If confidence remains low, it reflects external uncertainties, but this is probably secondary to global haven flows for the CHF.
May 13: Euro Area ZEW Economic Sentiment Index (May). An improvement from April's notably negative reading could offer some Euro support, but we'd need to see context.
May 15: Euro Area Employment Change Prelim (Q1) for QoQ and YoY.
Slowing quarter-over-quarter job growth would just add to worries about the overall economic outlook for the Euro.
A weakening trend year-over-year reinforces those signals of sluggish growth, negative for EUR.
May 15: Euro Area Industrial Production MoM (Mar). A contraction as forecast would definitely highlight ongoing struggles in the industrial sector, negative for the Euro.
May 16: Switzerland Industrial Production YoY (Q1). Positive growth here, if it comes through, would show some decent industrial resilience – supportive for the CHF.
May 16: Euro Area Balance of Trade (Mar). A widening surplus is positive, sure, but still likely overshadowed by looking ahead to potential trade risks for the Euro.
May 20: Euro Area Consumer Confidence Flash (May). Continued weakness around the April levels would weigh on the Euro's prospects.
May 22: Euro Area HCOB PMI Flash surveys (May) for Composite (Forecast: 50-ish), Manufacturing (Forecast: 47.2), Services.
Composite readings near the forecast 50 level will show whether stagnation is just sticking around, offering little real direction for EUR.
Persistent deep contraction in manufacturing as forecast would be distinctly negative for the Euro.
Services remaining the main engine of any slight growth is key; meeting forecasts might be mildly EUR supportive but isn't enough on its own.
May 23: Euro Area Negotiated Wage Growth (Q1). Moderating growth as expected fits the ECB's view that wage pressures are easing – neutral to slightly negative for EUR overall.
May 27: Switzerland Balance of Trade (Apr). Continuing to see strong surpluses would signal export resilience, positive for the CHF.
May 27: Euro Area Economic Sentiment (May). Sentiment remains a big indicator; meeting low forecasts implies caution is still the mood, negative for EUR.
Structuring a Potential Trade
Given everything discussed – the general feeling that EUR/CHF might see further downside – a speculative short trade could make sense here. The real trick, though, is figuring out a good spot to get in – maybe by waiting for the pair to bounce a bit first.
Entry: Let's say you look to get in – maybe try initiating a short position if the pair rallies towards that 0.9350 level. Why there? It's kind of the middle point of that recent "fair value" zone (0.9250-0.9450), and it used to be support before the recent drop. Now, it could turn into resistance.
Stop-Loss: For the stop-loss, perhaps place it around 200 pips above your entry – let's say at 0.9550. That level is safely above where the pair stalled out in early April before the sharp decline. It gives you some buffer in case things get choppy or sentiment shifts.
Take-Profit: And for a take-profit target, you might aim for the recent lows near 0.9200. That level has clearly acted as support during the recent "risk-off" moves. It seems like a reasonable initial objective if the bearish momentum kicks in again.
Pulling It All Together: Conviction and Caveats
So, putting it all together, how strong is the view on a short EUR/CHF trade over these next seven weeks? I'd say the conviction is medium right now. Fundamentally, that picture of the ECB likely staying loose while the SNB has more flexibility – plus the CHF acting as that go-to safe haven amid US trade policy worries – definitely leans towards a bearish view.
But – and this is crucial – there are some pretty significant risks that could easily blow up this whole idea. For starters, imagine a sudden cooling off in global trade tensions. That would instantly make the CHF less appealing as a haven. Or what if Eurozone economic data comes out way better than anyone expects? That could seriously make the ECB rethink their easing plans. Even an unexpected hawkish comment or two from an ECB official could give the Euro a real boost. And of course, completely unpredictable swings in wider market risk – think unexpected geopolitical events – can always completely change currency flows in a flash.
For anyone looking at trading EUR/CHF, the key takeaways seem clear:
First up, really pay attention to what's happening with US trade policy and overall global risk sentiment. Those are huge drivers for the CHF's haven status.
Next, keep a very close watch on all the incoming economic data from both the Eurozone and Switzerland – especially inflation, growth figures, and sentiment surveys.
Also, listen carefully to the ECB and SNB – are they hinting at any change in direction or tone?
Finally, given all this uncertainty and potential for sudden moves (it's a volatile world out there!), managing your risk smartly is absolutely essential. That means using sensible position sizes and sticking to your stop-loss levels.