EUR/CHF: Subdued US real rates trim upside potential to 1.11 – Danske Bank

EUR/CHF has continued to edge lower now trading below 1.09 as US real rates have moved significantly lower. Subsequently, economists at Danske Bank have slightly downgraded EUR/CHF forecasts for the coming months.

Risk is ECB rate hikes talking

“We have revised our EUR/CHF forecasts slightly lower. We still see a case for higher US real rates, in step with the Fed turning more hawkish, which should lift EUR/CHF.” 

“We now forecast EUR/CHF will trade at 1.11 in 12M (down from 1.13).”

“The key joker for the pair is if global macro becomes so good in Europe that markets start talking about ECB rate hikes. Today, such a scenario is not in play. A setback in risk sentiment is another joker.”