EURCHF to become a volatility victim?

So far the SNB was clearly keeping the exchange rate artificially low and had used the fact that EUR-CHF was clearly de-coupled from the moves in other EUR pairs as proof of this theory. An increasing EUR recovery may however mean that the equilibrium exchange rate was going to be high enough for the SNB not to have to intervene any longer. 

"As a result EUR-CHF would then be able to fluctuate in a normal manner again. The fact that EUR-CHF has recently increasingly reacted to the EUR moves in third currencies is pointing that way. If that was to be the case further general EUR strength might have a significant impact on EUR/CHF", says Commerzbank.

However, renewed EUR weakness will take EUR-CHF back into areas where the SNB will be forced to intervene again so that EUR-CHF would once again be decoupled from the other EUR moves. 

"Only then would EUR-CHF exchange rates become unsustainable again. On the other hand the strong EUR-CHF move may also be the result of very effective SNB intervention, in which case EUR-CHF should quickly correct lower again though", added Commerzbank.