(16 AUGUST 2017)DAILY MARKET BRIEF 2:EURCHF is heading higher but not for long

The Helvetic currency is suffering against the euro and the pair is back below 1.15. We nonetheless do not believe that the pair will continue to head towards 1.20 and the ongoing move may not be sustainable in the medium-term.

The fundamentals behind the recent surge of the single currency against the euro appears unclear. The economic and political situation have not changed during the summer. Yet we consider that this is only a catch-up as the euro strengthened against major G10 currencies on growing expectations of the Eurozone recovery. Markets now expect the ECB to narrow the monetary policy divergence with the Fed

European geopolitical tensions are also very calm during this summer. It is also important to remember that the massive Greek debt issue is far from solved and this will likely weigh again on the European Union unity.

Those basic reasons are our rationale on why downside pressures on the EURCHF pair are set to appear again. Markets definitely overestimate the Eurozone recovery.

By Yann Quelenn