ZURICH: The Swiss franc hovered against the euro and the dollar on Tuesday with little direction seen ahead of the quarterly meeting of the Swiss central bank on Thursday.
The Swiss National Bank is expected to reiterate its commitment to maintaining a lid on the safe-haven currency at 1.20 per euro when it announces its quarterly monetary policy decision at 0830 GMT on Thursday.
Data out on Monday showed the amount of cash commercial banks held with the SNB fell slightly last week, suggesting the central bank did not have to intervene to defend the 1.20 level as the franc weakened to trade above 1.21 per euro.
"In light of the fundamental challenges for the Swiss economy, markets seemingly are no longer willing to test the SNB on their minimum exchange rate in EURCHF at 1.20," said UBS economist Reto Huenerwadel.
The franc ticked up 0.1 percent against the dollar to trade at 0.9324 by 0654 GMT compared to the New York close.
The franc was flat against the euro at 1.2078.
The euro has recovered from Friday's two-week trough after Italian Prime Minister Mario Monti played down market fears over his decision to resign, saying there was no danger of a vacuum ahead of an election in the spring.
"The euro managed to recoup some of its losses after dropping to a low around 1.2880 versus the dollar which is a strong support level," said Mitul Kotecha of Credit Agricole.
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