Jens Nærvig Pedersen, Senior Analyst at Danske Bank, explains that political uncertainty in Europe, coupled with rising geopolitical risks following the election of Donald Trump as the next US president has supported CHF and put pressure on SNB to act to curb CHF appreciation pressure.
“Political uncertainty looks to be a key theme for FX markets again this year. EUR/CHF is still trading close to 1.07. We expect it to stay here in the near term as long as Le Pen is in the French presidential race. Longer term, we continue to expect fundamentals to support a higher EUR/CHF. We forecast EUR/CHF at 1.07 in 1M, 1.08 in 3M, 1.11 in 6M and 1.14 in 12M.”