Analysts at MUFG Bank, abandoned their bullish Swiss franc view for now. After recent developments they see diminished risks of a breach of the 1.0500 level in the EUR/CHF pair.
“The failure of EUR/USD to break 1.1000 yesterday may reflect reservations on the deal being completed. Much negotiation lies ahead in funds would be distributed but we expect a progress and a deal to ultimately be reached. That changes the balance of risks for CHF. In addition, the COVID-19 crisis has further illustrated the determination of the SNB to continue its intervention policy, no matter the consequences.”
“Sight deposits have now increased CHF 77bn since the start of March, although the pace of increase in May has slowed. Some of this increased reflects other SNB measures – COVID crisis loans to banks like elsewhere. But SNB officials have been open about confirming active intervention.”
“This determination and the bounce in EUR/CHF on Monday could well spark some LONG CHF position liquidation. The spec market is running long positions for the longest period since 2013-14. Monday’s EUR/CHF was the largest since Sep 2018. So we have shifted our bearish stance on EUR/CHF and see diminished risks of a breach of the 1.0500 level, and further upside gains over the short-term are possible.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.