According to Citi analysts, market sentiment on the EUR/CHF
currency pair seems to be changing.
The EUR/CHF exchange rate has somewhat reconnected with interest rate
differentials as a result of Germany's recent budgetary initiatives. But
according to Citi analysts, the current price may now accurately reflect these
concerns.
If there are negative developments about tariffs as the April 2 deadline draws
near, the European Central Bank's (ECB) dovish attitude could be further
emphasised. The EUR/CHF exchange rate may be impacted by this possible
expansion of the ECB's dovish premium.
Furthermore, it is not anticipated that the Swiss Franc will decline much as a
result of this week's Swiss National Bank (SNB) meeting. According to Citi
analysts, the SNB's only viable options are to maintain the existing rates or
implement a hawkish interest rate drop that would indicate a policy halt.
Additionally, Citi notes that the market appears to have already built in a
significant degree of confidence surrounding a peace plan for Ukraine. Citi
analysts think that the recent surge in the EURCHF exchange rate may have
peaked due to these combined factors.
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