The Euro (EUR) could weaken against the Swiss Franc (CHF), potentially reaching 0.96 in the next one to three months, according to Rabobank’s Senior FX Strategist Jane Foley. This prediction stems from concerns over potential instability in French politics and broader economic challenges within the Eurozone.

Safe Haven Appeal of the Swiss Franc

Historically, the Swiss Franc has served as a safe haven during times of economic uncertainty. The Swiss National Bank (SNB) has a track record of combating deflation and disinflation, which often leads to CHF strength during Eurozone crises.

French Political and Fiscal Risks

Despite recent relief following French political developments, Rabobank highlights the ongoing difficulty in repairing France’s budget deficit. Coupled with potential fiscal concerns in Italy, this could pressure the Euro and drive demand for the safe-haven Swiss Franc.

Eurozone Policy Outlook

Rabobank anticipates an easier policy bias from the European Central Bank (ECB) into 2025, given the underlying economic risks in the Eurozone. This dovish outlook, combined with potential political and fiscal jitters, could further weaken the Euro against the Swiss Franc.

Key Points:

• EUR/CHF could drop to 0.96 in the next 1-3 months.
• Safe-haven demand for the CHF typically increases during Eurozone turmoil.
• French political and fiscal risks remain a concern.
• An easier policy bias from the ECB could further weaken the Euro.