From its September low around 0.9410, EUR/CHF has recovered some ground. In view of the safe haven dynamic of the Franc, the growth risks in the Eurozone complicates the outlook for the pair, economists at Rabobank report.

Hawkish tone of the ECB initially provided further support for EUR/CHF

“The hawkish tone of the ECB initially provided further support for EUR/CHF. However, the ECB’s policy is essentially aimed at curbing an inflation rate which is to a large extent being led by higher energy and food prices. Tighter financial conditions combined with the risk that energy prices may rise again next year are bad news for growth.”

“In view of the fact that imports of expensive energy imports have weighed heavily on the Eurozone’s current account, the EUR could be more sensitive to a deterioration in risk appetite next year. Commonly, if the risk appetite in the Eurozone is under pressure, the CHF benefits from a safe haven bid.” 

“Given our view that the EUR is not out of the woods, we see risk that EUR/CHF could struggle to break above the 0.99 level on a three-month view.”

This article was originally published by Fxstreet.com.Read the original article here.

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