EUR/CHF has pulled back some of its losses from last Friday!
In case you missed it, demand for safe havens like the Swiss franc dragged EUR/CHF and other CHF pairs waaaay lower late last Friday.
It looks like traders are in a more cautious risk-taking mood so far today.
EUR/CHF 1-hour Forex Chart by TradingView
And why not? Not only was there a lack of serious escalation over the weekend, but it looks like the powers that be are focused on finding some sort of resolution in the next few days.
Israel, for example, is hinting at preparations for evacuation corridors. U.S. Secretary of State Antony Blinken is also set to return to Israel today while POTUS Biden and German Chancellor Olaf Scholz are also rumored to be considering trips to Israel in the next few days.
With not a lot of top-tier data to price in, Monday traders are happy to focus on the diplomatic developments. Safe haven CHF has lost some of its Friday gains and “risky” bets have gained some ground.
EUR/CHF, in particular, has bounced from its weekly open prices near .9470 and is now trading above the .9500 psychological handle.
We got our eyes on the .9525 – .9570 area as a potential entry zone for a break-and-retest setup. As you can see, the area lines up with a support zone in August and September and is not far from the .9520 Pivot Point line in the 1-hour chart.
The potential selling area also sits just below the R1 (.9580) Pivot Point line as well as the 100 and 200 SMA potential resistance areas.
Of course, EUR/CHF’s next direction may highly depend on the geopolitical headlines in the next trading sessions.
If traders shrug off the Israel-Hamas conflict and focus on easing inflation and “peak rate” speculations for the major economies, then EUR/CHF may trade above the sell zone we’re watching.
We’ll know this if EUR/CHF consistently trades above the 100 and 200 SMAs or shows bullish candlesticks above the R1 region.
But if we see escalations of armed conflict, or if resolution talks break down, then traders may return to buying the safe haven CHF.
EUR/CHF, which has already popped up by its daily average volatility of 47(ish) pips, can turn lower and probably revisit its Friday lows if not make new October lows.
What do you think?
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