The Swiss National Bank (SNB) left its policy rate unchanged at -0.75%, even as the European Union’s Chief Brexit Negotiator Michel Barnier has announced that he has the coronavirus.
The SNB was not expected to cut rates, which are already in negative territory and have done little to blunt the Swiss Franc’s safe-haven status. However, the SNB stays it will provide liquidity and will intervene forcefully in the FX market if the need arises.
On the European side of things, the coronavirus continues to spread as the EU’s Chief Negotiator Barnier announcing that he had contracted the coronavirus. His announcement came just as the ECB rolled out its biggest stimulus package ever, probably in response to market criticism that it had not done enough in its last m=eeting. The ECB has announced a temporary €750 billion Pandemic Emergency Purchase Programme (PEPP), which will see it purchase public and private assets to counter the economic risks posed by the coronavirus outbreak. PEPP is to last until the end of the year.
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A muted market response has followed these announcements on the EURCHF. The pair had fallen drastically in the last few weeks after breaking below the bearish flag on the weekly chart. The 1.06152 support has broken down, opening the door towards the next medium-term support at 1.04751 (neckline of the triple bottom of April to July 2015. This target also completes the measured move from the bearish flag. Further support is seen at the troughs that form the triple bottom, located at a price range of 1.02312 and 1.02980.
On the flip side, 1.06152 is the next resistance, having performed the S-R flip, after which 1.07371 forms the next resistance target (cluster of highs on December 2016 – Jan 2017 as well as the 13 January 2020 low).
Sentiment continues to remain bearish, and price recovery to key price levels may trigger renewed selling.