Hedge Funds Boost Franc Shorts Amid Carry Trade Shift
Hedge funds have increased their net short positions in the Swiss franc to near a two-month high, according to Bloomberg. This is due to carry traders shifting away from the yen and towards the franc for funding, citing lower volatility and diminished intervention risk.
The repositioning has led to an increase in the use of the franc in funding strategies, which may adjust liquidity flows within the EUR/CHF cross. This shift in carry activity, combined with heightened institutional short interest, has directly influenced the supply dynamics of the Swiss franc in currency markets.
EUR/CHF is currently trading below its key moving averages on the hourly chart but remains above its longer-term moving average levels. Immediate resistance sits at Fr.0.9389, while support for the pair is at Fr.0.9308. The pair is expected to remain in the Fr.0.9308 to Fr.0.9402 range for the next two to three trading days.