The Swiss Franc (CHF) recorded some losses against the Euro today because of the weakening Swiss economy and the Euro showing some strength after a long drive down. There were news reports that the Swiss economy had contracted 0.3% over the fourth quarter of 2008. This was a sequential decline to the 0.1% contraction in the third quarter; and closely correlates to the Gross Domestic Product decline. GDP contracted 0.8% for the 4th quarter, which was actually a bit better than economists had anticipated.
While today's rebound of the Euro against the dollar was just a correction, we might be seeing the Euro rallying against the Swiss Franc. The EURCHF pair has been consolidating in the 1.47-1.51 zone for the last two months. If the current news on the flagging Swiss economy should trigger buying pressure here, the pair can ultimately rise to its established resistance level at around 1.51.
It is unlikely it would cross that level though, as the Euro seems too weak, especially because of its eroding position against the dollar. However, because the Swiss Franc is dropping against the dollar as well, the Euro's rise against the Swiss Franc could be strengthened if the Euro gains some ground versus the dollar again.
Although slight resemblance may be seen, the EURUSD and EURCHF currency pairs do not follow the exact same patterns and therefore short term movements of these pairs may differ significantly. Such differentiation presents opportunities to trade the Euro against different currencies, depending on what is anticipated to yield the most profit.
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