EUR/CHF: SNB could be forced to act even under the eye of the US – MUFG

How much stronger can the Swiss franc get?, asks analysts at MUFG Bank. The Swiss franc reached levels not seen since 2015 versus the euro. According to them, if EUR/CHF breaks under 1.0500, it could spark a flurry of buying and a surge stronger. 

Key Quotes:

“The Swiss franc has continued to perform well and is in focus today after EUR/CHF broke notably below the 1.0500 level for the first time since July 2015 – not even through the worst point of turmoil last year did EUR/CHF break the 1.0500 level. So this is significant and highlights underlying and persistent CHF strength. This strength in 2021 has been since March. The rise in global yields in Q1 helped fuel CHF selling but since the narrative changed to focusing on inflation concerns and supply constraint issues, CHF has trended stronger versus EUR.”

“While global inflation may ease SNB concerns and offer the prospect of a less active fight against CHF appreciation, we suspect at some point the markets may force the hand of the SNB to intervene and limit CHF strength from a move beyond parity.”