EUR/CHF, increasingly fragile

There is a risk in EUR-CHF of relatively small events such as this morning's move (approx. one centime lower) causing larger moves.

The SNB made it abundantly clear on 15th January that it is unwilling to intervene on a large scale as it is worried about an excessive balance sheet size. That means that the current EUR-CHF levels are not sustainable and that at some stage soon the exchange rate will have to record the next jump down, says Commerzbank. 

That will not have to happen today, tomorrow or over the coming months. But of course each down move in EUR-CHF increases the risk that it will happen soon.

First of all moves of this nature force the SNB to take action and on the other hand each down move illustrates the vulnerability of the artificially high EUR-CHF levels.