EUR/CHF targets 1.20 in 6-month – Danske Bank

Chief Analyst at Danske Bank Christin Tuxen expects the cross to clinch de key 1.20 handle in the medium term.

Key Quotes

“CHF has gained during the recent reflation-driven risk sell-off but the franc had seen support from a more aggressive SNB. In our view, the market is currently ignoring that the road to exit for the SNB entails more steps than that of the ECB: fading SNB intervention is only a first step in the SNB’s 'normalisation' process; the next step will be to stop characterising CHF as ‘highly valued’. However, with the effective CHF appreciating recently, risking the recovery with exit talk is not a route we believe the SNB will want to go down. We think the SNB will remain on the sidelines on further steps towards ‘normalisation’ for now, which should allow EUR/CHF to edge firmly into the 1.20s this year”.

“We have kept our forecast profile intact, looking for 1.17 in 3M, 1.20 in 6M and 1.23 in 12M (all unchanged); we see 1.16 in 1M as risk sentiment remains fragile”.