BofA favors Swiss franc over euro for bearish dollar view amid yield shifts

Published 05/08/2025, 10:00
© Reuters.

Investing.com - Bank of America strategists are recommending investors express bearish dollar views against the Swiss franc rather than the euro this week, according to a new research note released Monday.

The bank’s Currency and Rates Strategy (CARS) model entered what it terms a "macro shock regime" last week, triggered by falling U.S. Treasury yields. This shift in market conditions would typically favor the Swiss franc over the euro when trading against the dollar.

BofA analysts noted that while the U.S. dollar’s price movements versus both the euro and Swiss franc have been highly correlated throughout 2023, recent developments suggest a potential divergence. The Swiss franc has weakened more significantly than the euro in recent weeks, which the bank attributes to "idiosyncratically high US tariffs rate" affecting Switzerland.

The bank believes this tariff-related pressure on the Swiss franc could have room to "de-escalate," potentially creating a more favorable environment for the currency against the dollar compared to the euro. This view aligns with their broader bearish outlook on the U.S. dollar.

BofA strategists cautioned that the primary risk to their bearish dollar view would be a potential near-term rally in the U.S. currency, particularly if upcoming Institute for Supply Management (ISM) services data proves stronger than expected.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.