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SWITZERLAND: Contrasting Analyst Views on EURCHF Outlook

SWITZERLAND
CEEMEASwitzerlandBulletMarketsForeign Exchange Bullets
  • In the aftermath of the mentioned interview and yesterday's CPI, sellside views and market expectations on EURCHF are mixed.
  • Danske project the cross at 0.90 in 12 months as they see the Eurozone/Switzerland rate differential outlook "narrowing over the coming year" regardless of muted inflationary pressures in Switzerland - which Danske think will bring the SNB "policy rate down to 0% by summer".
  • In contrast, BBVA "expect EURCHF to gradually move higher throughout the year", as the SNB is to "remain attentive to contain any additional CHF appreciation".
  • Markets meanwhile appear to line up rather with Danske's expectations, clearly remaining cognizant of the downside risks in EURCHF as evident in the skew in the options-implied probability distribution favouring the cross lower into year-end: markets currently price ~41% implied odds for EURCHF to close 2025 below 0.92 vs. ~30% implied odds for a close above 0.95. The skew here is particularly notable given the closer proximity of spot to recent range highs.
  • Initial technical support for the cross is at 0.9320, the January low. Below here, the double bottom and multi-year low ~0.9200 remains key support. On the other hand, a cluster of highs just above the 0.95 handle, represent the short-term resistance zone.
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  • In the aftermath of the mentioned interview and yesterday's CPI, sellside views and market expectations on EURCHF are mixed.
  • Danske project the cross at 0.90 in 12 months as they see the Eurozone/Switzerland rate differential outlook "narrowing over the coming year" regardless of muted inflationary pressures in Switzerland - which Danske think will bring the SNB "policy rate down to 0% by summer".
  • In contrast, BBVA "expect EURCHF to gradually move higher throughout the year", as the SNB is to "remain attentive to contain any additional CHF appreciation".
  • Markets meanwhile appear to line up rather with Danske's expectations, clearly remaining cognizant of the downside risks in EURCHF as evident in the skew in the options-implied probability distribution favouring the cross lower into year-end: markets currently price ~41% implied odds for EURCHF to close 2025 below 0.92 vs. ~30% implied odds for a close above 0.95. The skew here is particularly notable given the closer proximity of spot to recent range highs.
  • Initial technical support for the cross is at 0.9320, the January low. Below here, the double bottom and multi-year low ~0.9200 remains key support. On the other hand, a cluster of highs just above the 0.95 handle, represent the short-term resistance zone.