Forex Flash: USD/CHF expected to reach parity by year-end on Eurozone concerns – Goldman Sachs

FXstreet.com (Barcelona) - The Swiss franc has been a clear beneficiary of events in Cyprus as risk premia abounds in the Eurozone. According to the UBS Research Team, “Domestic clients in Switzerland have steadfastly refused to buy the EUR/CHF even though the cross has traded in a more volatile manner this year above the Swiss National Bank's minimum 1.2000 target floor.”

That view has been based on the Eurozone crisis presenting too much risk for holding long EUR/CHF positions. This weekend's news will only reinforce such convictions amongst Swiss clients. “We thus now expect the EUR/CHF to trade around 1.22-1.2300 over the next one to three months rather than our previous near term forecast range of 1.25-1.2700 for the cross. However, given our bullish dollar view, we continue to see the USD/CHF reaching parity by year-end.