What is EUR/CHF?
The EUR/CHF forex trading pair represents the exchange rate of the euro (EUR) to the Swiss franc (CHF). It denotes the number of Swiss francs (the quote currency) necessary to buy one euro (the base currency). EUR/CHF is referred to as a "cross" currency pair because it consists of two major currencies but not the US dollar.
The euro is the official currency of the Eurozone, which includes 19 of the EU's 27 member countries. It debuted as a virtual currency in 1999 before its actual (physical) launch in 2002. It is a widely traded currency that is managed by the European Central Bank (ECB) and is used for international trade, investment, and as a reserve currency.
The CHF is a strong currency that represents the Swiss economy's competitiveness as well as the country's macroeconomic and political stability. The franc is highly sought-after as a safe currency, particularly during times of crisis.
The EUR/CHF currency pair is a prominent and liquid currency pair in the forex market, and it provides the potential for profit through speculation or hedging techniques.
What affects the price of the EUR/CHF pair?
The Eurozone's economic performance, as well as political events and geopolitical crises, are important determinants of euro pricing. Elections, policy changes, Brexit-related developments, tensions among EU member states, and concerns about the Eurozone's future all have the potential to influence euro market sentiment.
Because of its low inflation rate and steady economy, the Swiss franc is regarded as a safe-haven asset. This characteristic makes it particularly attractive during periods of financial or economic uncertainty, causing the CHF's value to rise relative to the EUR. Switzerland is also a major physical gold trade centre, with five of the world's leading precious metal refineries, where 70% of the world's supply is melted and refined. As a result, fluctuations in gold prices have an impact on the value of the CHF. When they rise, demand for the CHF and its value in comparison to the EUR might increase.
The Swiss National Bank's (SNB) and European Central Bank's (ECB) monetary policies have a considerable impact on the EUR/CHF exchange rate. Interest rate differentials between the two may entice foreign investors, resulting in capital flows and influencing the currency pair.
What to watch out for when trading EUR/CHF?
Keep an eye out for data releases and statements from significant influential bodies in Switzerland, the Eurozone, the European Union, and individual member countries (particularly Germany, Europe's largest economy) when trading EURCHF.
- The European Central Bank (ECB) and Swiss National Bank (SNB) determine interest rates and policy
- Eurostat and the Swiss Federal Statistics Office (FSO) provide data with announcements on Trade Balance, EU Average Hourly Labour Costs, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)
- Geopolitical tensions, wars, and conflicts – particularly if they are affecting Europe