EUR/CHF set to reach parity on a 12-month horizon – Danske Bank

EUR/CHF has been declining since mid-September and is currently trading at the lowest level since 2015. Economists at Danske Bank expect the pair to suffer further losses towards the 1.00 level. 

Key upside risks are global yield curves steepening and FX intervention from the SNB

“We believe there is still room for further declines as, 1) persistently diverging price levels favour a fundamentally stronger CHF via PPP 2) the SNB will let CHF appreciate on fundamentals and 3) as a global investment environment characterised by tighter economic policy and global liquidity conditions weighing on growth and inflation momentum favour a stronger CHF.”

“We do a broad revision of our overall forecast of EUR/CHF and now target the cross at 1.00 in 12M (previously 1.08).”

“The key upside risks to our forecast are global yield curves steepening amid a shift in the global investment environment and/or an FX intervention from the SNB in order to avoid EUR/CHF from declining too much.”