MUFG Bank Analysts expect the USD / CHF pair to break below the 0.9000 area. They explain that the news about the COVID-19 vaccine challenges the strength of the Swiss franc, but the main central banks will continue to maintain a flexible monetary policy well into the recovery that supports the attractiveness of the CHF.
“USD / CHF recently tested and held key support at the 0.9000 level, but we expect it to break down in the future. We continue to believe that Joe Biden’s election victory supports our outlook for further USD weakness. We still expect the Fed to step up monetary easing to support the economic recovery, especially now that Congress is likely to remain divided and the third wave of COVID is intensifying in the US. “
“The latest FOMC Minutes noted that the Fed is likely to offer a stronger commitment to sustain QE purchases over the next year, even as the recovery strengthens. Similarly, the ECB is prepared to announce a further significant expansion of up to € 500 billion of its own QE program in December, increasing the relative attractiveness of the CHF against the EUR as well. As a result, we believe it is premature to see a sustainable downward reversal for currency debasement trades, which could pick up next year if inflation recovers while maintaining loose monetary policy. The CHF has been one of the main beneficiaries of the currency degradation trade along with the price of gold. “