Central banks have had their say for Q1 and there were arguably two surprises, both from central banks that have deployed negative interest rates in the recent past. The Bank of Japan decided to exit negative rates and the Swiss National Bank , in a surprise decision, voted to cut their benchmark interest rate – the first of the major central banks to do so.lay the foundation for further easing to come from the often-unpredictable SNB before Chairman Thomas Jordan steps down in September.
Now that the SNB has pulled the trigger and cut rates, this allows other central banks to consider the doing the same. However, being the first mover, theopened itself up to currency depreciation due to a worsening of interest rate differentials. For other nations still experiencing stubborn inflation, this would have been a concern but given the franc’s undesirable appreciation and Switzerland’s impressively low CPI – the decision to cut actually makes sense for the EU member state.
A level to consider includes 0.9085 which serves as a tripwire for continued bullish price action. Thereafter, upside targets comprise of 0.9245 and 0.9473. A retest of the late 2023 low would invalidate the bullish setup.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Information presented by DailyFX Limited should be construed as market commentary, merely observing economical, political and market conditions. This information is made available for informational purposes only. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice.
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