The Swissie
The CHF in this cross is the Swiss Franc, also known as the Swissie. The EUR in this cross is the Euro. The quotation of the pair says to traders how many Swiss Francs are needed to buy one Euro.
Thus, the value of the EURCHF cross is quoted as 1 Euro per X Swiss Francs. Meaning, if the cross is trading at 1.10, it requires 1.10 Swiss Francs to buy one Euro. If the EURCHF cross rises to 1.15, it means that the Euro has strengthened (the Swissie has weakened), and it now takes 1.15 Swiss Francs to buy one Euro. On the other hand, if the EURCHF cross drops to 1.00, it means that the EUR has weakened (and the Swissie has strengthened), and it now takes 1.00 Swiss Francs to buy one EUR, also known as parity.
What drives the EURCHF cross?
As we previously mentioned, the calculation of this cross is derived from the difference between the EURUSD pair and the USDCHF pair. These two are very tightly correlated, meaning if one moves up, the other one moves down, usually with nearly the same percentage change. Therefore, there is little space for the EURCHF cross actually to move anywhere, and significant trends in this cross happen only occasionally.
Maybe the best-known trend in this cross used to be in 2015 when the Swiss National Bank decided to abandon the 1.20 peg, and the EURCHF cross dropped nearly 20% within minutes (the Franc strengthened), only to stabilize a couple of days after.
Since then, it took the cross three years to reach the 1.20 level again, only to be sold here, and the bearish trend returned.
Safe-haven status
Due to Switzerland's stable political and financial position, the Swiss Franc is considered as a safe-haven currency. It strengthens in bad times and tends to weaken during risk-on sentiment. As the Euro and the whole Eurozone faced disintegration during the Greece crisis, the EURUSD pair has been under severe pressure, while the USDCHF pair did not rise so much. That had led to a strong downtrend in the EURCHF cross as traders rushed into safe-haven currencies, such as the Swiss Franc.
Lowest interest rate
The Swiss Franc is known for its lowest interest rate in the world (from the G20 currencies). As of May 2020, the Swiss National Bank maintains the primary interest rate at -0.75%. Therefore, the Swiss Franc is the main refinancing currency (along with the Japanese yen) of the Carry Trades.
Performance
As you can see on the weekly EURCHF chart, the large candle on the left side of the chart is the week when the SNB abandoned its peg, and the CHF strengthened massively. It was pure chaos – there was no liquidity, and it was impossible to trade Swiss Franc for some hours. However, after the dust settled, the cross started going higher as the economic situation in the eurozone improved.
Source: Purple Trading MetaTrader 4
As the price touched the 1.20 threshold from the downside, sellers jumped back into the market, and since then, a slow bearish trend is intact.