Synopsis:

Danske forecasts the Swiss National Bank will cut rates in September and December, leading to a temporary peak in EUR/CHF before a longer-term decline.

Key Points:

• Rate Cuts Anticipated: SNB is expected to reduce the policy rate by 25bps in both September and December, lowering it to 0.75% by the end of the year.
• EUR/CHF Forecast: The cross is predicted to top within the next 1-3 months, with targets of 0.97 in 3 months and 0.95 in 12 months.
• Near-Term Drivers: Relative rates and potential SNB FX intervention are likely to support EUR/CHF in the near term.
• Long-Term Outlook: Despite short-term gains, fundamental pressures are expected to favor the CHF, leading to a decline in EUR/CHF over time.

Conclusion:

Danske's projection indicates that EUR/CHF will likely experience short-term gains due to SNB rate cuts and possible FX interventions but will face a downtrend longer-term as CHF fundamentals strengthen.