Aila Mihr, analyst at Danske Bank, assessed the recent price action surrounding the pair EUR/CHF and the short-term outlook.
“The EUR/CHF continued to rise on Friday, and the crossing won more than 3% last week. The extent is surprising, since I get no new information”.
“In fact, the speculation about the divergence of the ECB-SNB (European Central Bank – Swiss National Bank) could be a catalyst for the outputs of the CHF when the ECB moves towards an exit strategy.”
“However, in our judgment, the actions of prices indicate that large flows driven by mergers and acquisitions could be in play here (not confirmed). As such, the crossover could be exposed to new peaks in the short term.”
“In addition, the euro has become the rage among investors and we hope that the new higher levels remain intact in the future. Finally, the EUR/CHF remains fundamentally undervalued, according to the model Meva of Danske Bank, which suggests that 1.25 is a reasonable value and I still expect the cross to advance in 6-12 months”.