EUR/CHF oscillated below the 1.22 mark and Kim Jong Il’s death aggravated tensions

On Monday (December 19), at the beginning of the European market, the EUR/CHF oscillated at a low level and the intraday price fell to a 7-week low of 1.2180.

The news of the death of North Korean leader Kim Jong Il today caused the market to worry about the more intense relations between North Korea, South Korea, the United States, and Japan. The risk aversion sentiment warmed. Due to the SNB’s firm defense of the EUR/CHF lower limit, the CHF's hedging function has been suppressed to some extent.

Prior to this, Fitch downgraded the French letter assessment outlook to negative. Moody's downgraded Belgium's rating to Aa3. EUR/CHF quickly pared earlier gains as investors worried that the credit rating agencies will lower the sovereign credit rating of the euro zone countries.

In addition, as the North Korean leader Kim Jong Il’s death triggered a major shock in the financial markets, the USD/CHF fell to a low of 0.9358.

FXstreet. Valeria Bednarik, chief analyst at com, stated that during the month of October, the EUR/CHF oscillated within the 250-point range. Currently, the market lacks any technical signals and continues to focus on whether the SNB raises the EUR/CHF exchange rate floor.

Bednarik expects that the EUR/CHF may fall to around 1.2100/30 in the day and then consolidate, further supporting the 1.2000 area. However, since the market is still concerned that the Swiss National Bank will adjust the Swiss franc ceiling, it does not believe that the EUR/CHF will be a new low.

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