Bank of America Merrill Lynch Research discusses CHF outlook and maintains a bearish bias in the medium-term.
"In many ways April provides the roadmap on how we think CHF will evolve over the coming months if global (and particularly Eurozone) growth stabilises and should regional geo-political concerns (such as Brexit) fade as we expect that they will.
We therefore remain bearish on CHF over the medium-term due to its persistent overvaluation, the trend deterioration in Switzerland's basic balance of payments (the current account surplus continues to be neutralised by sizeable net portfolio and FDI outflows) and the SNB's commitment for a weaker CHF," BofAML notes.
"However, we are cautious that the current move can meaningfully extend through key resistance at 1.15. Whilst the market backdrop remains supportive for further EUR/CHF gains: volatility compression; the rally in European bank stocks, carry-to-vol; and stable BTP-Bund spreads, the move has taken place against a backdrop of a void in Brexit news flow. In addition, with European Parliamentary elections scheduled in a months' time," BofAML adds.