In January 2015, the Swiss National Bank, in a move that took everyone by surprise, decided to remove the then floor of 1.20 in the euro/Swiss franc currency pair exchange rate, despite repeatedly promising to defend that level at all costs and for as long as necessary. Rates literally tanked more than 2,000 pips in a matter of minutes as the franc skyrocketed. Fast forward just a little more than three years...
Ahead of Friday's U.S. jobs report, the U.S. dollar/Swiss franc (USD/CHF) currency pair has been among the strongest dollar pairs. This has been mainly due to a slumping Swiss franc rather than a rallying U.S. dollar. Indeed, the EUR/CHF and GBP/CHF have both been rising while the CHF/JPY has been falling of late. The Swiss franc remains fundamentally weak owing to a dovish central bank.
In the event the data beats expectations then it makes sense to look for signs of dollar strength against currencies which have underperformed, such as the yen. While the likes of the EUR/USD, Swiss franc/dollar (CHF/USD) and the British pound/dollar (GBP/USD) have rallied above their highs last year, the JPY/USD has yet to do the same.
It might not be on every trader’s radar, but the euro/Swiss franc (EUR/CHF) currency pair has reached its highest level since the Swiss National Bank’s decision to scrap its 1.20 floor in January 2015.