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Jun 23 - 04:55 AM

EUR/USD - Bid Stems From Risk Aversion, It Won't Last

By Jeremy Boulton  —  Jun 23 - 03:10 AM
  • EUR/USD has risen since Fed hiked 75bps and fuelled risk aversion

  • SNB also hiked which shocked but CHF did little and that is a shock too

  • Without a controlling hand EUR/CHF may have dumped below parity

  • SNB promised intervention and is probably actively supporting EUR/CHF

  • If SNB stops EUR/CHF falling when it should then EUR/USD is likely to rise

  • Having stabilized EUR/CHF to mitigate the shock SNB may step back

  • A slowly rising franc now suits Swiss policy which will undermine EUR/USD

  • The more EUR/CHF purchased, the more euros sold to rebalance reserves



Source:
Refinitiv IFR Research/Market Commentary

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