It was very interesting to read the insider hedge fund report on Thursday which said that the bigger speculative players were now flat on CHF positioning. The market doesn’t like to be flat, and we immediately saw a dive in the EUR/CHF. I’m still sure that the market would much prefer to be long CHF than long EUR, so the only reason for being long EUR/CHF is in expectation of more SNB action. If the SNB does nothing, this pair will test bull patience by drifting back towards the pivotal 1.2000 level.
As we know from past experience, drawing a line in the sand is a dangerous game in the FX world, and the market’s natural reaction is to try and break the line. We should expect some more volatility in EUR/CHF over the coming weeks.
