From a technical perspective EUR/CHF is looking interesting. The pair is approaching trend-line support (drawn from the May 2020 low) which is coinciding with the 200-day moving average currently at 1.0875. Jane Foley, Senior FX Strategist at Rabobank, expects buyers to arrive at the mentioned level.
SNB to stick to its ultra-dovish policy settings for the foreseeable future
“If key support at 1.0875 is taken out, theory would suggest a break lower could be on the cards. That, however, would not necessarily sit well with the current perception surrounding the improved outlook for the Eurozone economy.”
“While a stronger domestic economic outlook is usually supportive for a currency, the fact that the SNB is set to maintain highly accommodative monetary policies should dampen the outlook for the CHF. In any case, insofar as the SNB is a safe haven, we have been arguing for years that the SNB’s holy grail of a weaker CHF is likely to follow a strengthening in eurozone fundamentals and the appearance of ‘Goldilocks’ conditions in the eurozone.”
“Stronger confidence in the eurozone is likely to draw flows away from the CHF. The strength of European stock market indices this year is suggestive of improved investments into the eurozone this year.”
“We would expect to see buyers at the EUR/CHF 1.0875 area assuming confidence in the growth outlook in the Eurozone is maintained and safe haven demand remains low.”
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