EUR/CHF: Balanced Risk N-Term; Scope For Move Higher In H2 – Danske

What is the outlook for EUR/CHF in the coming months?

Here is their view, courtesy of eFXdata:

Danske Research discusses EUR/CHF outlook and maintains a neutral bias on the cross over the coming months. Danske targets the cross at 1.08 in 1-3 months, and 1.10 in 6-12 months.

“Following the relief rally in EUR/CHF since early summer 2020, spot has been unchanged and intervention remains the key policy tool. Swiss policy rates are thus set to stay unchanged at the longstanding -0.75%. Going into Q1, EUR/USD took a step lower and with it EUR/CHF too. Currently, upside risk to European inflation and demand seems very limited (due to lockdowns). In turn, the near-term potential to see a weaker CHF also appears limited,” Danske notes.

We see balanced risks to EUR/CHF near term. If EUR/CHF is to move higher, it would be likely to happen in tandem with opening up the European economy from H2 onward. The key for the pair is if global and European macro become so good that markets start talking about ECB rate hikes. Today, such a scenario is not in play,” Danske adds.

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