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Investing.com - Goldman Sachs is maintaining its recommendation for investors to short the EUR/CHF currency pair, though it has adjusted its stop-loss level from 0.9475 to 0.94 as the Swiss franc continues to strengthen against the euro.
The investment bank initially recommended the short position to counter what it considered an unjustified negative currency reaction to U.S. tariffs on Swiss imports. Goldman Sachs analysts believe U.S. importers will struggle to find substitutes for Swiss goods in the near term, eliminating the need for currency adjustment to maintain competitive production.
Since the recommendation, the currency pair has moved approximately halfway toward Goldman’s target of 0.93, as the gap to "fair value" in the bank’s GSBEER model has decreased. The firm notes that other cyclical developments have also moved in favor of the Swiss franc.
Goldman Sachs identifies the Swiss franc as a potential key beneficiary if French fiscal risks become more prominent than currently expected. The bank also cites concerns about the U.S. labor market ahead of upcoming economic data as a factor supporting its position.
While acknowledging that risk-reward has become "somewhat less favorable," Goldman Sachs advises investors to continue targeting 0.93 on EUR/CHF but to manage the position "more tactically" given recent market movements.
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