FXstreet.com (Barcelona) - In the FX landscape, the most
notorious mover by far is the Swiss Franc, amid the realization
that the Eurozone tail risks are diminishing for the early part of
2013, a fact that seems to be driving a large portion of safe-haven
related flows away from the CHF and into riskier assets.
The greatest beneficiary on the ongoing EUR/CHF spikes, currently
at 1-year high, is the Euro, having found a positive driver, to
help its quest towards the level many traders have in mind at the
moment, that is, the USD 1.3485 technical resistance. Besides, cuts
in interest rates by the ECB no longer being an option short-term
talking, is too underpinning the price.
Commenting on the recent EUR/CHF wild moves, Kit Juckes, Head of
Foreign Exchange at Societe Generale, notes: "The market is busy
gapping aggressively higher and taking out layer after layer of
strikes. It is happening very quickly and market makers are
panicking leading EUR/CHF vols to move explosively higher in the
front end. The next layer of strikes is reportedly between 1.24 and
1.25, though looking at price action it seems that we hit a layer
of strikes every 20 pips or so."
Meanwhile, the US Dollar remains weak across the board, yet the
losses vs G10 currencies have been largely contained despite Fed's
Bernanke late Monday speech at the University Michigan, in which
the chairmanfailed to provide clues over the possible duration of
the QE program.
Kathy Lien, co-founder at BKAssetManagement, comments on Bernanke's
latest public intervention: "The only clue that the Fed chairman
may not be willing to give up monetary easing so easily was when he
said the central bank has not run out of ammunition with the main
rate at zero. He said securities purchases and communications could
still be used to increase transparency and ease monetary policy.
Yet along these lines, investors shouldn't make too much of these
comments since Bernanke also admitted that the Fed must be vigilant
toward asset price bubbles."
Technically speaking, the EUR/USD short term picture looks neutral,
says Valeria Bednarik, chief analyst at FXstreet.com, while in the
4 hours chart, the bias remains strongly constructive for the
bulls, she notes: "RSI reached 70 before bouncing back north, while
20 SMA continues to hold a healthy bullish slope." If the pair can
hold above 1.3320/30, "there's scope for a run towards the 1.3485
price zone" Valeria thinks.