FXStreet (Bali) - EUR/CHF dipped further on Wednesday, testing not just the important 1.2060 support, where semi-official bids were rumored, but also SNB's patience, as the key 1.20 peg comes into focus.

With the Euro being offered outright in recent weeks in anticipation of a new QE program being announced by the ECB, coupled with geo-political risks still not over (Ukraine-Russian crisis), the stars have been aligning in favour of EUR/CHF bears.

What are the options the SNB has to defend the EUR/CHF 1.20 peg? In an overnight article, the Financial Times quotes Beat Siegenthaler, FX strategist at UBS, arguing that as spec positioning stands, "any pre-emptive intervention is probably unlikely, for one thing, the SNB’s reserve position is relatively transparent with detailed numbers published monthly, so any intervention would be picked up quickly and arguably construed as a sign of panic."

Siegenthaler thinks that a better way to counter current market dynamics in EURCHF would be the introduction of negative rates on deposits by the SNB. If that were to happen, the effect is likely to be a cheaper Swiss Franc, which would temporarily assist the EURCHF to trade higher, barring the Euro does not keep collapsing at the pace seen in recent weeks (unlikely as looser ECB priced in).

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