EUR/CHF breaks below 1.10, remains vulnerable in the near-term

The EUR/CHF cross is extending its sharp reversal for second day running and has now dropped its lowest level since early May to currently trade below 1.1000 handle at 1.0980.

Data released earlier during the day showed foreign currency reserves held at the Swiss National Bank (SNB) rose substantially in May, by CHF14.2 billion to an all-time high of CHF602.1 billion. Immediately after the release, the EUR/CHF cross broke through and remained below 1.10 handle. 

Meanwhile, the Swiss Franc also seems to be benefitting from safe-haven flows as markets remained nervous on the possibilities of 'Brexit' and has been a rank outperformer as compared to its European counterparts.

From a technical perspective, the pair has now broken below important moving-averages (50-day and 100-day SMAs) confluence region near 1.1000-1.0990 region. Moreover a sustained trade below 1.1000 handle and hence, a follow through selling pressure below 1.0955-50 immediate support, would turn its vulnerable to further downside in the near-term. 

Technical levels to watch

Weakness below 1.0955-50 immediate support (late April lows) is likely to get extended towards 1.0900 round figure mark. The downward trajectory could further get extended towards April monthly lows support near 1.0840 area. 

On the flip side, the pair need to regain bullish momentum above 1.100 handle, above which the pair could stage further recovery towards 1.1020 resistance ahead of a strong resistance near 1.1045-50 region.