Fx_Montana
Short

$EURCHF 10 to 1 Returns: Sell

FX:EURCHF   Euro / Swiss Franc
More of a technical play here, as the market bounced off the 2016 highand has now reached a key inflection point where the 1.150 handle meets Fib618 from the high of the previous leg lower and also horizontal resistance at 1.1490. Technically the lower trendline here if that were to break would be further bearish confirmation.

Fundamentally, if the Euro growth story continues to stall and slow, core CPI in Euro area continues to slow in to year end (opposite to ECB rhetoric) and the US continues on rate path of hiking in to Decemeber and in to 2019 I think the USD will press on and drive EURUSD lower.
CHF has been acting a bit strange, not reacting as normally to usual risk off character and has rebounded here for reasons I dont understand.

Good technical set up and nice reward. Trade offers potential 10 to 1 returns if played back down to the 2018 low 1.1200. With s stop placed just above Fib618 and 1.15 handle a sigificant breach of this level would reassess this market.
Comment: The main driver in this market is Italian risk in Europe. Picture the EURCHF as the safe haven market for Europe, like USDJPY for the globe. Youll see what i mean if you overlay BTP yield over the EURCHF, notice the spike lower in the market happens at the same time BTP yield spiked higher... more specifically its a sharply widening Bund vs BTP spread that sparked the aggressive selloff in EURCHF.
When Bund vs BTP spread widens sharply thourgh 300bps due to Italian risk or greek or spanish risk whatever... EUR falls accross the board and CHF gains on safe haven flow. So you have the demand supply thing where each currency moves in opposite directions...
I think the recent unexplained slow grinding move higher in EUFCHF could be as spreads begin to settle down and Italy amended the budget and finally sent it off to Europe... Notice that in todays session (17 Oct) after italian Govt source said there may be downgrades to Italy credit rating, Bund vs BTP spread sharply widened back past 300bps and that resulted in EUFCHF trading around Lod
Comment: So therefore any ESCALATION in the Italian budget dispute, if the budget is rejected and the Italian govt doesnt back on there targets leading a "war of words" between EU and Italy causes bund vs BTP spread to widen again... EURCHF short would be the trade of choice... and and de escalation would be the reverse the trade would unwind
Comment: Taken 1st partial in to the rising Trendline @ 1.14 handle and tightening stop loss... Trade is risk free
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