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EUR/CHF holds gentle uptrend as Rabobank lifts 9 to 12 month target

Rabobank raised its EUR/CHF 9 to 12 month forecast to 0.95 from 0.94, citing stronger-than-expected Swiss Q2 GDP alongside benign inflation.

Reported · Written up by our desk · Major Pairs

Rabobank’s senior FX strategist Jane Foley said EUR/CHF has stayed in a gentle uptrend since late May, even as Switzerland’s economy looks more resilient after stronger-than-expected Q2 GDP.

Foley revised her 9 to 12 month EUR/CHF target to 0.95 from 0.94, arguing that strong Swiss growth, benign inflation and near zero interest rates could limit further upside and increase the odds of sideways trading.

She added that the Swiss National Bank needs to be satisfied with the softening in the CHF’s value in recent months, noting that the SNB has historically faced safe haven inflows into the franc and that intervention was likely in Q2, most likely in March.

Foley also pointed to ECB support, saying the franc’s recent weakness was reinforced by the ECB’s June rate hike and expectations that policy could tighten further, while the market sees little risk of a SNB rate hike over the next 12 months.

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