How many of you guys were up last night watching the price action in CHF pairs? I was looking at EUR/CHF during the first market opening hours and I noticed something very strange. While all forex pairs were standing still, EUR/CHF was moving around like a lunatic. 

Mind you, the range was very very tight, only several pips, but the pace of the price movement was extraordinary. It was moving up and down very quickly in a time when all other major forex pairs were still asleep, so something was just not right. 

So what was it? 

It's not hard to guess; it was the SNB (Swiss National Bank) trying to fight the market back. The two old nemesis were having a go at each other once more. On one side was the forex market trying to find some safety in the CHF, which is a safe haven currency. On the other side was the SNB trying to keep their currency at affordable levels. 

You'd argue that nothing compares to a central bank, so why was there a fight at first place?

Well, a central bank is the biggest market player by far in the forex market, but if we add up all the other market participants that make up the forex market, then the central bank looks like a Lilliput. A central bank has unlimited amount of money at its disposal, but no central bank has ever printed unlimited amounts of its own currency, while investors and speculators can throw everything they have at the market. That's why we have often seen central banks fail miserably. 

Naming a few of these occasions: the BOE (Bank of England) failed to stop the market crashing the GBP during the "Soros selloff", the BOJ (Bank of Japan) failed to keep USD/JPY under control this year, and of course, the time the SNB threw the towel last January when they were forced to remove the 1.20 peg against the Euro, which sent CHF pairs thousands of pips higher. So, as you can see, the central banks don't always win. 

They are mighty players, but not as might as the forex market, which is worth around $5 trillion on a daily basis. 

That said, the SNB won that battle. I knew the 1.0680-90 area was the line in the sand for the SNB, but you never know when a central bank is going to give up. So this morning, I couldn't wait t see who won the battle. Well the hourly EUR/CHF chart tells the story; the SNB won this battle. The price in this forex pair was about 50 pips higher this morning, so 1 – 0 for the SNB today. 

This makes it 2 – 0 if we take into account last week's intervention as well. So, the SNB won the battle but not the war. Forex is always an ongoing battle between market forces, so don't get too relaxed guys. A forex trader is doomed to never sleeping in peace, but this is the deal we made when we first entered this business.