The symbol stands for Euro/Swiss Franc. It tells the reader about the number of Swiss Franc that one needs to have in order to buy one Euro. The Euro in this case is the base currency, while the Swiss Franc is the counter currency.
Facts and Information
To anyone new to the world of forex, the EUR/CHF currency pair might seem to be confusing. This relationship is often regarded as one of the most important currency relationships in the forex market. The reason lies in the fact that the EUR and CHF share a relationship which is the strongest in the market.
Switzerland occupies a position amidst the Eurozone countries. The closeness between Switzerland and the EU has led to trading ties that are so strong that the steps taken by EU can easily affect the businesses in Switzerland. To-date, more than 100 pacts have been signed between the Eurozone and Switzerland, which have further reinforced the relation shared between EUR and CHF. Since the economies are related, the currencies are inevitably linked to one another.
While EUR stands out as the world’s second largest currency, Swiss Franc serves to be the safe havens for traders in times of uncertainty in the market to prevent major losses. It has also been observed that the CHF is a more stable currency than the euro.
Factors Influencing the Pair
Inflation rate has an almost instantaneous effect on the exchange rate of the currency pair. Even though the most common exchange in Switzerland is that between EUR and CHF, higher inflation rates will continue to demean the rate at which the daily exchange takes place. If the inflation rate hikes in Switzerland, the value of CHF will weaken against the EUR. The same rule applies to EUR.
The rate at which EUR/USD and USD/CHF exchanges take place will also have a very profound effect on the EUR/CHF currency duo. The inverse correlation helps traders in predicting the next trend. When the EUR/USD improve, it is quite probable that at the same time the CHF/USD currency pair is being sold. In addition, interest rates implemented by the banks further determine the standing of the pair.
The European Union Bank also has considerable control over the EUR/CHF. The decisions this bank makes about the fiscal strategies of the Eurozone can have both a negative and a positive impact on the exchange rate. When the Bank decides to intervene in forex to strengthen the Euro, it is very likely that the rate of exchange might slow down a bit. But it should be retained in mind that the CHF adjusts itself in time to stay almost in line with the Euro against the USD.
Taking Advantage of News Trading to Make Money While Trading
No trader can succeed in the forex market by lagging behind the latest trends and forex news. Staying in line with the latest forex news and events can help traders fare better during business hours every day by alarming them about any risks involved in the market, beforehand.