EUR/CHF: In the absence of new political risks, likely to move higher - Danske Bank

Analysts at Danske Bank, expect the EUR/CHF pair to remain near 1.13 in a month and then moving higher, with a target at 1.20 in a 12M horizon. 

Key Quotes: 

“EUR/CHF flirted with a firm break of the SNB’s old 1.20 floor in mid-April, an ECB on hold and recurring political risks in Europe have sent the cross back to mid-2017 levels. However, as we are increasingly optimistic that EU political risks will subside near term, we see CHF settling around current levels in H2. The SNB is likely to remain reluctant to change its communication in light of the recent CHF appreciation and a still-rather-distant first hike from the ECB.”

“In the absence of new political risks, this should allow EUR/CHF to reinvoke a gradual move back towards 1.20 in 12M. It is likely to require a clear dip below 1.10 for the SNB to start intervening on a larger scale.”

“We have upped our near-term EUR/CHF profile due to our shift in stance on Italian risks and now look for 1.13 in 1M, 1.13 (unchanged) in 3M, 1.16 (unchanged) in 6M and 1.20 (unchanged) in 12M.”