With European risks likely to intensify in the coming weeks, the EUR/CHF pair is unlikely to see meaningful bounce anytime soon, according to analysts at Goldman Sachs.
The currency pair is currently trading at 1.1188, having clocked a low of 1.1162 on Friday. At that level, the currency pair was down 2.46 percent from the high of 1.1444 registered on Feb. 5.
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Our model estimate of EUR/CHF fair value has dropped by about 6 big figures since last April-3 from Italy and Turkey spillovers, 2 from Euro area growth concerns, and 1 from Brexit-related volatility.
Looking forward, the tricky part is that these risks are somewhat unrelated, so it is difficult to see a path where they all dissipate at once. Easing tensions in Italy for example will probably do little to relax Brexit uncertainty (although all of them would probably help raise Euro area growth prospects to some degree).
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