Morgan Stanley sees break in EUR/CHF floor in 3Q when it expects the SNB to let EUR/CHF drop to 1.10 and believes EUR/CHF could hit all-time lows following such a break. Says the SNB’s hardest battle is yet to come and one it ultimately won’t win. “In our view, the biggest reason is that EUR/CHF’s decline stems from Europe, not Switzerland,” say currency strategists at the bank. Notes that while other EUR crosses have rallied, EUR/CHF has stayed still indicating that it will try to fall amid a wider EUR downtrend. “In a real flight to quality, we do not believe the SNB has enough ammunition, short of instituting capital controls, to stop CHF appreciation,” they say. EUR/CHF at 1.2085.


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