EUR/CHF Uptrend Remains Intact Amid Higher CPI
The EUR/CHF currency pair saw a pullback on Thursday as the Euro dropped against the Swiss franc. This is despite the overall uptrend remaining intact, according to Christopher Lewis, a technical analyst at DailyForex.
The August Consumer Price Index (CPI) in Switzerland came in higher than expected at 0.8% year-on-year, up from 0.4% in July and against the consensus of 0.5%. This is the first time this has happened, and it's unclear if it will be a long-term issue.
However, Lewis notes that the carry trade remains intact, with interest rate differentials likely to widen as traders anticipate a 25-basis point interest rate hike from the European Central Bank (ECB). The Swiss National Bank (SNB) has limited room for further rate cuts, while the ECB can continue to add stimulus.
As a result, Lewis believes this is still a positive and one-way trade, but recommends being cautious with position size and wherewithal. He sees no reason to panic, given the overall trend remains intact and the market has been in a straight line since May.