Synopsis:
Volatile global risk sentiment, intensified by the latest round of US tariffs, has dragged EUR/CHF lower despite euro strength elsewhere. RBC notes that CHF is now highly sensitive to swings in risk appetite, making any EUR/CHF upside unlikely without a significant easing in trade tensions.
Key Points:
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Tariffs Hit EUR/CHF: The introduction of Trump’s reciprocal tariffs has triggered a sharp risk-off move, pulling EUR/CHF lower—even as the euro strengthened against the dollar.
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Risk Sentiment Drives CHF: The Swiss franc remains highly correlated to market risk aversion, making its near-term trajectory largely dependent on macro uncertainty and equity market performance.
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Alternative CHF Trade: For investors wanting CHF exposure less tied to the S&P 500, RBC highlights CHF/JPY as relatively more insulated from recent risk swings.
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Medium-Term Fundamentals Still Supportive: RBC maintains that the fundamental backdrop for EUR/CHF supports a higher level, but this potential will only be realized if trade-related volatility subsides.
Conclusion:
Until reciprocal tariffs and broader market fears subside, CHF will remain well-supported, limiting EUR/CHF upside despite otherwise constructive fundamentals. Expect consolidation near current levels in the short term, with longer-term gains contingent on improved global sentiment.
