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EUR/CHF ready for further rises - Danske Bank

Aila Mihr, an analyst at Danske Bank, evaluated the recent price action around the EUR/CHF pair and short-term outlook.


Key statements:


"The EUR/CHF continued to rise on Friday and the crossing gained more than 3% last week. The move is surprising as it came without new information."

"In fact, speculation about the divergence of the ECB-SNB (European Central Bank - Swiss National Bank) could be a catalyst for CHF outflows as the ECB moves towards an exit strategy."


"However, in our view, price action indicates that large flows driven by mergers and acquisitions could be at stake here (unconfirmed). As such, the crossover could be exposed to new spikes in the short term."


"The euro has again become fashionable among investors and we expect the new higher levels to remain intact in the future. Finally, the EUR/CHF remains fundamentally undervalued, according to Danske Bank's Meva model, Which suggests that 1.25 is a reasonable value and we still expect the crossover to advance in 6-12 months. "


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