Deutsche Bank and Goldman Sachs analysts see fresh upside potential for the Swiss franc, citing its renewed appeal as a safe-haven asset and shifts in monetary-policy expectations across major central banks.
While the Swiss National Bank has held steady in recent months, the Federal Reserve, European Central Bank and Bank of Japan have all moved to raise rates, making the franc a cheap funding currency and weighing on its value. That dynamic may be nearing its end.
George Saravelos, DB's head of global FX strategy, recommended selling the euro against the franc in a Monday research note, arguing the pair is due for a revaluation as global rate trajectories turn more restrictive.
The EUR/CHF had tracked short-term rate differentials closely after the SNB signaled early this year an increased willingness to intervene against overly strong franc appreciation. Saravelos said that threshold was now high enough that further tightening of global rates would continue to support the franc. Rising energy prices could also make it difficult for the SNB to keep mid-term inflation within its target range under the current policy stance.
The franc has depreciated more than 4 percent in real terms against the euro since the start of the year, bringing it back to its ten-year average real exchange-rate level — no longer overvalued by that measure, Saravelos calculated. He also pointed to SNB President Martin Schlegel's recent hints about heightened intervention readiness, which could signal preparation for a future policy tightening or a shift toward a more restrictive stance. Model calculations show the SNB has barely intervened since April, while positioning indicators still reflect net short positions in the franc.
On a shorter time frame, growing signals suggest the franc is regaining its status as a risk-off asset. "We find selling the euro against the franc attractive, particularly as seasonality in the fourth quarter also argues for a lower EUR/CHF," Saravelos concluded.
Goldman Sachs strategists echoed the cautious outlook on the franc, pointing to the interest-rate differential as a key driver of its recent weakness. They expect the SNB to hold its current stance at next week's meeting and for some time after. SNB President Schlegel acknowledged that Swiss inflation has picked up but stressed the rise has been milder than abroad and that there are few signs yet of second-round effects.
Nevertheless, Goldman noted early indications that the SNB is increasingly focusing on upside inflation risks and is less inclined to promote franc weakness. The bank does not expect a rapid franc revaluation in the near term but highlighted that the SNB has sharpened its attention on the real effective exchange rate, particularly given another wave of higher energy prices and a widening inflation gap between the euro area and Switzerland.
Because the franc remains a popular funding currency, there is room for appreciation: a tighter SNB stance could trigger the unwinding of short positions, Goldman said. On a twelve-month horizon, the bank forecasts the dollar at 0.79 CHF and the euro at 0.9160 CHF.
