ING FX Strategy Research notes that the highlight for CHF traders this week will be Thursday’s SNB meeting.
“Expect the SNB to fan the flames of divergence between itself and the ECB, allowing rate spreads to widen and EUR/CHF to strengthen. The SNB still thinks the CHF is overvalued, whether it drops the adverb ‘significantly’ could be of interest.
The bottom line, however, is that ECB QE broke EUR/CHF and the SNB now expect ECB tapering to fix it. We agree with their position and see scope for a big rally over the coming quarters,” ING argues.
In line with this view, ING targets EUR/CHF at 1.15 in 1-month and 1.25 in 12-months.