The euro has rallied against the Swiss franc from early March lows right below parity. Still, economists at Danske Bank expect the EUR/CHF pair to hover around the 1.00 level in the next 12 months.

CHF to appreciate against the EUR on the back of fundamentals

“Higher commodity prices, elevated geopolitical risk from the Russia-Ukraine war and sour risk sentiment weighed heavy on the cross. In the near-term, we expect these to continue to be the key drivers for the pair.”

“We maintain our base case of relative monetary policy convergence, as we expect the ECB to hike by the end of 2022 and the SNB to gradually follow suit.”

“We continue to expect CHF to appreciate against the EUR on the back of fundamentals and a move towards a global investment environment characterised by tighter economic policy and global liquidity conditions. We, therefore, continue to target the cross at 1.00 in 12M.”