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Citi released its latest currency analysis, projecting a moderate strengthening of the Swiss Franc (CHF) against the US Dollar (USD) while anticipating a slight weakening against the Euro (EUR).
The financial services company indicated that the Swiss National Bank’s (SNB) monetary easing and the growing interest rate differential with the US and the eurozone are unlikely to significantly depress the CHF. Nonetheless, these measures could help to curb any substantial appreciation of the currency.
Citi’s currency strategists foresee the CHF trading within a core range of CHF0.85 to CHF0.90 per USD over time. In contrast, the CHF is expected to experience a modest decline in value against the EUR, with projected trading levels ranging from CHF0.93 to CHF0.98 per EUR. The firm’s outlook suggests that the CHF will maintain a degree of stability within these specified ranges.
Moreover, Citi analysts highlighted a potential decline in the CHF against the Japanese Yen (JPY), predicting the possibility of the CHF/JPY exchange rate falling below the support line of around ¥165/CHF later in the year. The 200-day moving average, currently at about ¥172/CHF, is anticipated to become a stronger resistance level.
The report also pointed out that the fundamental driver for the CHF/JPY pair over the long term is the disparity in trade accounts between the two nations.
However, Citi noted that short-term fluctuations in this currency pair are more directly influenced by changes in the market environment for risk assets, such as Japanese equities.
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