Chief Analyst at Danske Bank Christin Tuxen believes the cross could extend the upside to the 1.15 area in a year’s view.
“Abating political risks in the Eurozone following the French elections should help the SNB in mitigating safe-haven flows into Switzerland. However, with an ECB exit from negative rates still not in the cards the SNB could be forced to sell CHF still”.
“The Trump administration’s ‘trade deficit’ review could put Switzerland in the spotlight as a ‘currency manipulator’, but we do not look for any changes to SNB policy given the widespread support in the international community for the view that CHF is caught at overvalued levels”.
“As we do not think the ECB is rushing for the exit, it will take some time for this long-standing undervaluation in EUR/CHF to be corrected but the imminent down pressure should be gone for now. We see the cross at 1.09 in 1M and keep the rest of our forecasts unchanged at 1.10 in 3M, 1.12 in 6M, and 1.15 in 12M”.
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