Should you buy the EUR/CHF rate?EURO / SWISS FRANCFX_IDC:EURCHFSwissquoteFor several months now, major central banks around the world have begun intervening in the floating foreign exchange market (Forex). The main reason is the strength of the US dollar since the beginning of the year, linked to the Federal Reserve’s (Fed) status quo. Asian central banks were the first to act, as major emerging Asian currencies fell following geopolitical events in the Middle East. This decline in currencies such as the Indian rupee, Indonesian rupiah, and South Korean won forced the respective central banks to intervene in FX markets to slow their depreciation against the US dollar. Japan is another example, with direct interventions by the Bank of Japan in the Forex market amounting to tens of billions of US dollars, buying yen and selling US dollars in order to stop the rise of USD/JPY. All these central banks share the same objective: to neutralize or slow the appreciation of the US dollar against their domestic currencies. This marks the return of direct or indirect central bank intervention in FX markets. However, the situation is different for the Swiss franc (CHF). The Swiss National Bank directly intervenes in Forex markets to slow the appreciation of the franc, which attracts capital due to its safe-haven status. Below is the first part of the press release from the Swiss National Bank’s latest monetary policy decision dated June 18, explicitly mentioning intervention in the foreign exchange market. The latest monetary policy decision from the Swiss National Bank explicitly states that the central bank may intervene at any time to curb the appreciation of the franc and therefore the decline of the EUR/CHF exchange rate. The EUR/CHF pair remains in a downward technical trend, but this move is showing signs of exhaustion, as illustrated by a descending wedge pattern. However, there is currently no buy signal on EUR/CHF. Staying short is becoming increasingly risky, as you are effectively trading against a central bank. A first bullish signal would be a breakout above the weekly Ichimoku cloud. The chart below shows weekly Japanese candlesticks of the EUR/CHF exchange rate. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. 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