HOW TO TRADE FOREX: EURO/SWISS FRANC (EURCHF)
The EUR/CHF pair is a meeting point between two of Europe's most stable and prosperous economies, marked by Swiss precision and the influence of the Eurozone. This cross offers a perspective on the relationship between a safe-haven currency, the Swiss franc, and the euro, which is affected by the political and economic complexities of EU member countries. Successfully trading the EUR/CHF demands an in-depth understanding of key economic indicators of both the Eurozone and Switzerland, as well as the political movements that can influence the stability of both regions.
This pair is particularly interesting during times of uncertainty, as the Swiss franc tends to strengthen during periods of economic or political turmoil. Traders must keep a close watch on the decisions of the Swiss National Bank and the European Central Bank, as their monetary policies can significantly affect the direction of the EUR/CHF. With a well-founded strategy, this pair offers valuable opportunities for those who understand the nuances of European economies.
Top 10 Factors Affecting the Euro-Swiss Franc Pair
Monetary Policy of the European Central Bank (ECB) and Swiss National Bank (SNB): Decisions on interest rates, asset purchase programs, and other monetary policies can directly influence this pair. Any divergence in policy between the ECB and SNB can cause significant movements.
Interest Rate Differentials: Differences in interest rates between the Eurozone and Switzerland affect investment and capital flows, leading to changes in the relative demand for EUR and CHF.
Economic Situation in the Eurozone: Key economic indicators such as GDP growth, inflation, and unemployment in the Eurozone can affect confidence in the euro and, therefore, influence the EUR/CHF.
Political Stability in the Eurozone: Political uncertainty, elections in key Eurozone countries, and tensions within the European Union can affect the risk perception associated with the euro.
Global Risk Aversion: The Swiss franc is traditionally considered a safe-haven currency. In times of uncertainty or global crises, investors may move capital towards the CHF, strengthening it against the EUR.
SNB Interventions: The Swiss National Bank has historically intervened in the Forex market to control the strength of the CHF. Any indication of future interventions can influence the EUR/CHF.
Inflation in Switzerland and the Eurozone: Relative inflation rates can affect expectations about the ECB and SNB's future monetary policies, influencing the EUR's value against the CHF.
Trade Balance of Switzerland and the Eurozone: A trade surplus in Switzerland can increase the demand for CHF, while a surplus in the Eurozone could strengthen the EUR.
Capital Flows and Security: Capital flows towards safe and high-quality assets, both in Switzerland and the Eurozone, can alter the demand for CHF and EUR, respectively.
Geopolitical and Economic Events: Financial crises, geopolitical tensions, and significant political decisions within and outside Europe can alter risk perception and move the EUR/CHF pair.
Related Assets Influencing the Dynamics of the EUR/CHF Pair
DAX Index: As an indicator of the Eurozone's economic health, the German stock index can influence the EUR. A rising index can strengthen the EUR against the CHF.
SMI Index: Reflects Switzerland's economic health. A higher index indicates a robust economy, which could strengthen the CHF against the EUR.
Swiss Government Bond Yields: Swiss bonds are seen as a haven. A yield increase can attract capital to the CHF, strengthening it against the EUR.
Eurozone Bond Yields: Changes in the yields of sovereign bonds from major Eurozone countries affect the EUR. An increase in these yields may indicate a perception of higher risk or inflation expectations, potentially strengthening the EUR against the Dollar.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
BlackBull Markets, founded in 2014 by Michael Walker and Selwyn Loekman in Auckland, New Zealand, has emerged as a trusted and regulated ECN broker offering access to diverse tradable instruments. BlackBull Markets stands out with its three distinct types of ECN accounts, catering to traders' varying needs and preferences: Standard Account, Prime Account, and Institutional Account.
The Standard Account is an excellent choice for traders seeking a cost-effective forex experience. It offers a convenient entry point without minimum deposit requirements and commission-free trading. Traders can access all tradeable instruments and utilize user-friendly trading platforms, including PC, Mac, mobile, and Webtrader.
The Prime Account provides a competitive edge for those looking to maximize their trading potential. With spreads as low as 0.1 pips and a commission of $6 per lot for most currency pairs, traders can benefit from tighter spreads and lower costs. The Prime Account requires a minimum initial deposit of 2000 USD and offers leverage of up to 1:500, along with micro lots for precise position sizing.
BlackBull Markets also caters to larger traders with its Institutional Account, providing a truly institutional trading experience. With a minimum initial deposit of 20,000 USD, traders can access customisable commission structures, 24/7 dedicated technical support, and a customised MAM/PAMM platform. Qualifying traders can benefit from free VPS access based on trading volume.
Regulation is key to BlackBull Markets' offering, ensuring a secure and transparent trading environment. Prominent authorities regulate the broker, including the Financial Services Commission of New Zealand (FSPR).
With a commitment to exceptional financial services and a focus on client satisfaction, BlackBull Markets has garnered a strong reputation within the industry. Their comprehensive range of over 26,000 tradable instruments, competitive trading conditions, and reliable customer support positions them as a top choice for traders seeking a trusted ECN broker.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
