Market commentary by Danske Bank's chief analyst, Christin Tuxen
- Significant move above 1.20 is difficult if ECB remains hesitant on normalisation
- In any case, money market remains too optimistic on timing of SNB first rate hike
- The key step will be to look for the SNB to stop labeling CHF as "highly valued"
- But we think SNB will be reluctant to change its course
- That should allow EUR/CHF to edge firmly into the 1.20s this year; considering ECB is to keep its exit process "alive"
Tuxen also says that she sees EUR/CHF moving to 1.19 in 1M/3M, 1.21 in 6M, and 1.23 in 12M. The pair is currently holding above key support levels in the form of the 100-day MA (red line) @ 1.1739 and the 50.0 retracement level @ 1.1726. The former is a key level to eye as a hold here retains the bullish bias in the pair.
But a break below will open up a potential move towards the next support level at 1.1660. Be wary of the SNB coming in as well if we get anywhere near below 1.1700.
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