FxWirePro: Euro likely to under-perform franc is H1 2019

Based on the latest calculations, we at FxWirePro expect the single currency euro to underperform the Swiss franc at least in the first half of 2019. The single currency is currently trading at 1.126 against the franc and we expect the rate to slide towards 1.10 area first and then gradually to 1.05 area.

We expect the Brexit uncertainty to hurt the single currency going ahead amid trade troubles with the United States, where President Trump is likely to step up his attack on trade deficits with just two years remaining in his presidency. While Brexit trouble is likely to hurt the euro, the Swiss franc is likely to benefit from risk aversion flows.  

The only major risk to this outlook is the central banks’ policy divergence, where the European Central Bank (ECB) is expected to raise rates for the first time in years, Swiss National Bank (SNB) is expected to maintain its record easing policy with rates at -0.75 percent.