We recommended being long USD/CHF in our 25 June FX Quarterly and recently tightened the stop loss following appreciation of more than 5%. We think poor Swiss fundamentals continue to support CHF depreciation from still-overvalued levels. Even if concerns about Greece or China escalate, we think the CHF is likely to underperform higher-quality safe havens such as the USD.
Our technical strategist is also bearish CHF and expects further underperformance against the USD and EUR. The rising USD/CHF trend of the past eight weeks points higher toward initial targets in the 0.9865/0.9905 area. A move above the latter would encourage our bullish view toward the 1.0130 March recovery high. For EUR/CHF, the break above recent range highs near 1.0700 signals further upside towards our targets near the 1.0815 range highs.