The pair EUR/CHF has broken back above parity over the past week after bouncing off the 200-day moving average support around 0.9930, they explain. MUFG Bank analysts. They believe that price developments support their view that there is still room for the cross to rally back towards the levels it had during the second quarter of last year, closer to the 1.0500 level.

Notable Statements:

“Eurozone economies are proving more resilient over the winter period, and leading indicators such as the PMI surveys released last week have further allayed recession fears. Warmer winter weather has also made markets natural gas inventories to hold better than expected in Europe, which has put additional downward pressure on prices.This favorable development provides further support for the euro at the start of the year.Given the role of the CHF as a regional safe-haven currency , the CHF should weaken as downside risks in the eurozone continue to recede.”

“We also believe there is scope for the EUR/CHF to catch up with the EUR/USD rally since late last year. The SNB has recently stepped in to support the CHF. Now that global and Swiss inflationary pressure has subsided, is easing, the SNB could become more tolerant and allow the CHF to weaken a bit.”