The EUR/CHF is not he favorite cross for many traders, burned by the infamous SNBomb. Nevertheless, the pair is good barometer of the risk sentiment. What’s next?
Here is their view, courtesy of eFXdata:
Danske Research discusses EUR/CHF outlook and warns that the cross’s recent resistance to risk-off bouts might be on the cusp of changing in the near-term.
“While CHF has proved surprisingly resistant to Italian risks and the equity sell-off recently, we stress that the risk of further Italy-EU confrontation as well as Brexit negotiations setbacks remain likely. This should weigh on EUR/CHF short term.
The SNB will remain reluctant to change its communication in light of the stubbornly subdued inflationary pressure and a still-distant first hike from the ECB. In the absence of new political risks, this should allow EUR/CHF to re-invoke on 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.
Danske still looks for EUR/CHF to trade around 1.13 in 1M-month, 1.13 in 3-months, 1.16 in 6-months.
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