UBS is forecasting a euro / Swiss franc rate of 1.15 and above.

The reason for this will be a rising inflation, that should have a global coverage. As a result, central banks will no longer have to boost inflation through expansive monetary policy, which will be particularly noticeable in the euro area and will strengthen the euro.

The reason for the long-term lack of global inflation or marginal global inflation was above all one universal factor: the low oil prices. This dependency has been reflected like in a macroeconomic model and has forced the ECB to launch an expansive monetary policy, which means that the euro has been undervaluated for a long time.

It is expected that inflation and economic growth will stabilize, which on the other side will allow the European Central Bank to give up the current expansive monetary policy and raise interest rates over a longer period. The future strategies of the ECB and the SNB will be decisive for the euro-franc exchange rate in the near future. In the short term, however, the exchange rate is mainly influenced by current geopolitical events. In the past few months, the election of Donald Trump to the President of the USA was the most important factor. In the next few months, the EUR / CHF trend will also be influenced mainly by elections in the two major neighboring countries, France and Germany. In the case of radical changes of power and above all in the victory of populist candidates, one might expect the franc to become stronger again.

Last year, the SNB successfully defended the franc, and has always prevented a fall below the 1.06 limit. It is expected that this policy will continue to be pursued in 2017. UBS is firmly in the assumption that the ECB will reject the current expansive monetary policy in the medium term, thus clearing the way for a euro-franc exchange rate towards 1.15.

UBS also expects the US dollar to stabilize. The upward trend of the years 2014 and 2015 has strengthened the dollar by 25 percent, according to UBS estimates, and led to its overvaluation. The US economy and the global economy have largely recovered since the financial crisis. All of this predicts a weaker dollar and, in conjunction with a weakening Swiss franc, predict a price trend towards USD/CHF of 1.15 - 1.20.

https://www.ubs.com/ch/fr/swissbank/entreprises/telechargements/economic-research/_jcr_content/par/columncontrol/col2/linklist/link.1878506886.file/bGluay9wYXRoPS9jb250ZW50L2RhbS91YnMvZ2xvYmFsL3dlYWx0aF9tYW5hZ2VtZW50L3dlYWx0aF9tYW5hZ2VtZW50X3Jlc2VhcmNoL3Vic19vdXRsb29rX2NoLzIwMTcvZnIvb3VjaC0wMTE3LWZyLnBkZg==/ouch-0117-fr.pdf   (Page 16)