ZURICH: The Swiss franc moved higher against the dollar on Wednesday after easing off Tuesday's 19-month low against the greenback, though ongoing euro zone pressures kept it within striking distance of parity, a level last seen in late 2010.
The franc has tracked the euro closely since the Swiss National Bank set a cap of 1.20 per euro last September as investors fleeing the single currency pushed the safe-haven unit up 20 percent in just a few months.
The euro was also higher against the dollar after notching a two year low the previous session.
"The downtrend in the euro continues albeit interrupted by small short-lived moments of relief," said Credit Agricole analysts in a research note.
"Still, any upside in EUR has proven more and more difficult to maintain as peripheral bond yields face renewed pressure."
The European Central Bank's lending survey later on Wednesday should give clues to how the end of the long term refinancing operation, the ECB's plan to shore up euro zone banks, has affected credit conditions in the region.
Worsening credit conditions would increase the chance of the ECB using unconventional measures to support growth and keep pressure on the euro, the Credit Agricole analysts said.
In the meantime, demand for the Swiss franc as a haven is maintaining pressure on the SNB's franc-euro cap.
"In light of the ongoing fiscal, financial and economic strains in Europe the debate about the lower boundary in EURCHF remains ongoing," said UBS economist Reto Huenerwadel in a note.
"While the debate is a valid one not least in light of the solidly increasing Swiss balance sheets, we see little room for a change in the SNB's policy on that front anytime soon and for as long as Swiss CPI prints stand at all-time lows."
The franc was 0.1 percent higher against the dollar compared to the New York close, trading at 0.9942 francs per dollar at 0709.
The was little changed against the euro at 1.2008 francs per euro.
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