EUR/CHF poised for further upside – Danske Bank

Chief Analyst at Danske Bank Arne Rasmussen believes the cross could extend the upside beyond the critical 1.20 mark.

Key Quotes

“Among the majors, focus yesterday was on whether EUR/CHF would break the old SNB floor of 1.20 – from the downside this time round – and it did”.

“Over the past few weeks, US sanctions have seemingly led some Russians to repatriate funds placed in Switzerland, which has likely fuelled a CHF outflow”.

“Positioning is largely neutral CHF and long EUR/CHF, which in itself poses some limit as to how far on the upside we can go near term even if we see a clearer break of 1.20 in coming days”.

“Our Medium-term Valuation (MEVA) estimate for EUR/CHF is 1.28 and thus points to some upside still as ECB policy 'normalisation' drags on. We target 1.23 in 12M and our 3M forecast of 1.19 has been reached, but there is now a clear risk that we could settle above 1.20 on this horizon”.