EUR/CHF: Sustained move lower on back of fundamentals and continued tight financial conditions – Danske Bank
EUR/CHF is currently trading south of the 0.96 mark. Economists at Danske Bank analyze the pair’s outlook.
SNB FX intervention to keep a cap on EUR/CHF in the near term
We continue to expect the SNB to hike the policy rate by a final 25 bps at the September meeting bringing it to 2.00%. However, we stress that we rather see it as a matter of fine-tuning monetary policy and do not see the September meeting as fundamental for a long-held bullish view on CHF. Likewise, we continue to expect SNB FX intervention to keep a cap on EUR/CHF in the near term.
We forecast a sustained move lower in EUR/CHF on the back of fundamentals and continued tight financial conditions. We lower our entire profile in light of the lower spot, targeting the cross at 0.94 in 6-12M (from 0.95).
If the SNB decides to fully stop intervening, we see upside potential to EUR/CHF in the near term.
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