EUR/CHF poised for further upside – Danske Bank

Aila Mihr, Analyst at Danske Bank, assessed the recent price action around the cross and the prospects for the near term.

Key Quotes

“EUR/CHF continued higher on Friday and the cross gained more than 3% last week. The move is striking as it has come without new information”.

“Indeed, speculation about ECB-SNB divergence could be a catalyst for CHF outflows when the ECB moves towards an exit strategy”.

“However, in our view, price actions indicate that large M&A driven flows could be at play here (not confirmed). As such, the cross could still be exposed to further spikes higher in the near term”.

“Moreover, the euro has come back into fashion among investors and we expect the new higher levels to remain intact going forward. Finally, EUR/CHF remains fundamentally undervalued, according to Danske Bank’s Meva model, suggesting that 1.25 is a fair value and we still expect the cross to move higher in 6-12 months”.