Swiss Franc in the spotlight. More SNB intervention to come?

By CountingPips.com

The Swiss franc has reached its highest exchange rate against the euro today since March 12th when the Swiss National Bank (SNB) intervened in the forex market for the first time in 15 years. Can we expect the SNB to jump in again anytime soon?

On March 12th, the SNB reduced its interest rate to a new record low at 0.25 percent and announced that the bank will be intervening in the forex market “to prevent any further appreciation of the Swiss franc against the euro.” The euro (EUR/CHF) skyrocketed versus the franc that day from approximately the 1.4800 exchange level to just Free Technical Trend Analysisabove the 1.5300 level(see chart).

The SNB has resorted to currency intervention in order to fight the risk of deflation in Switzerland and because most conventional monetary policy tools like interest rate reductions have been exhausted.

On April 17th, SNB President Jean-Pierre Roth reiterated the bank’s policy to sell Swiss francs in the forex market and stated the bank was going to continue intervention if needed, saying, “In view of the risk of deflation, decisive action was called for, and we will continue to pursue this strategy for as long as the risk remains.”

Today, the euro has fallen versus the franc to its lowest exchange rate post-intervention at approximately 1.5023. Since the SNB seems strongly committed on keeping the franc weak, we can probably expect some intervention sooner or later but at what level?  The big 1.5000 francs per euro level looms closely and may be a worthwhile guess but could it be closer to the March 12th opening level around 1.4800?

We can only wait and see….