Headline: JPMorgan Says Swiss Franc Rally Looks Overdone, Sees EUR/CHF Rebound Potential
The Swiss franc’s latest surge has outpaced fundamentals, according to JPMorgan, which argues the EUR/CHF exchange rate is now stretched to the downside and primed for a rebound. The bank highlights that recent flows from hedge funds, real-money accounts, and systematic strategies have driven renewed franc buying, but the broader market backdrop does not justify such persistent strength.
JPMorgan notes that with the Eurozone economy holding up and risk sentiment improving—helped by the resolution of the US government shutdown—EUR/CHF should be trading higher, not lower. The firm also downplays the impact of reduced US tariffs, calling the effect on Switzerland relatively minor given the exposure represents roughly 4% of the Swiss economy. As a result, the bank views current levels as an opportunity to fade CHF strength and consider adding long EUR/CHF positions, though it maintains only moderate conviction due to ongoing skepticism around euro area growth.
On the technical front, EUR/CHF’s slide back toward 0.9230–0.9240 keeps pressure on the 0.9200 support area. JPMorgan expects that key level to hold, reinforcing its view that the foreign exchange market has pushed the franc too far in the near term and that a corrective move higher in EUR/CHF is likely.
Key Points – JPMorgan views the Swiss franc’s strength as excessive relative to fundamentals. – Recent CHF demand has been driven by hedge funds, real-money investors, and systematic buyers. – Improved risk sentiment and a resilient Eurozone backdrop point to higher EUR/CHF. – Reduced US tariffs are seen as largely immaterial, affecting about 4% of the Swiss economy. – The bank favors fading CHF strength and adding long EUR/CHF, with moderate conviction. – Key technical focus: 0.9200 support in EUR/CHF expected to hold.
