EUR/CHF could reach 1.18 in 6-month – Danske Bank

Chief Analyst at Danske Bank Christin Tuxen believes the cross could attempt a test of the 1.1800 area in the medium term.

Key Quotes

“While the ECB has entered ‘normalisation’ mode, the SNB has been keen to stay out of ‘exit’ discussions and used every opportunity to stress that it is in no hurry to quit negative rates and that intervention remains a policy tool”.

“Indeed, the SNB is keen to embrace the pricing of an eventual ECB exit from negative rates and QE, and a continued uptick in EUR/CHF with it. Near term, the euro rebound may take a breather, but as the SNB has confirmed it remains in the ‘no exit now’ camp, we deem that the central bank will be more than happy to let EUR/CHF edge towards 1.20 as currency help on inflation remains much needed”.

“We have adapted our forecast profile to reflect the potential for a eurozone debt-flow reversal to support EUR/CHF longer term as the next leg of ECB exit pricing gains traction. We now see the cross at 1.15 in 1M, 1.15 (1.14) in 3M, 1.18 (1.16) in 6M, and 1.23 (1.20) in 12M”.