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We believe that USD/CHF should be higher, the pair should have followed USD/JPY height, but it has not, which is a surprise to many people. However, the environment is different now, because the EUR/CHF is capped. Typically, if EUR/CHF does not go anywhere, there is a triangular relationship between those three currencies: Euro, Dollar and Swiss Franc. If one of them is effectively capped, if CHF has a floor beneath it, the market does not want to move, the currencies cross too far from that floor, then any rise in EUR/USD will have to be met by fall in USD/CHF. It is just a mathematical relationship.
I think USD/CHF is changing its characteristics, purely because the SNB has effectively tampered the EUR/CHF cross. I still believe USD/CHF is climbing higher, because we think the EUR/USD is declining. If one goes lower, the other must go higher, because EUR/CHF is not going to move very far. We still think that USD/CHF will go up, but it just has not happened yet, because EUR/USD is higher than it should be.
Three-month forecast for EUR/CHF
We do not think EUR/CHF is going to move at all, the pair is going to stay at 1.20 and it is not going to move very far in our view, while USD/CHF will climb to 0.96.