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UBS revised its currency forecast for EUR/CHF, lowering its end-2025 target from 0.97 to 0.94 and its end-2026 forecast from 1.00 to 0.96.
The adjustment reflects UBS's expectation of continued market volatility, which could maintain the Swiss Franc's strength beyond prior projections.
"In an environment of a high VIX level and risk aversion as well as US policy uncertainty it seems likely that CHF will be under appreciation pressure for longer than we initially expected," the bank's FX strategists wrote in a note.
UBS acknowledged the possibility that the Swiss National Bank's (SNB) policies might mitigate some of the Franc's strength in the future.
However, they advised against positioning for this outcome until the EURCHF trades below the lower end of their projected second-quarter range of 0.92 to 0.97.
The Swiss Franc, often considered a safe-haven currency, tends to appreciate during times of market uncertainty. UBS's revised forecast suggests the firm anticipates such conditions to persist, influencing the EUR/CHF exchange rate.
The bank's analysis indicates that while SNB's policy interventions could offer some counterbalance to the Franc's appreciation, it is not a scenario they recommend betting on at the moment.
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