Danske Bank - "The euro remains bid and EUR/CHF has broken higher and thereby reached our 1.25 target (...) for a 2.9% profit.
(...)We continue to see EUR/CHF risks skewed to the upside and will look for an opportunity to re-enter a long position. Yes, price momentum is looking stretched, but if this is the structural shift in capital flows with the Euro crisis safe-haven flows leaving Switzerland then there should be much further potential (we would expect a test of1.30 in that scenario).
The drivers of the FX market and the euro uptrend remain the same as over the past week: (i) higher euro money market rates (sidelined ECB and LTRO repayment), and (ii) overall supportive environment for risk assets. The question is, which euro-crosses are most vulnerable and are there currencies that have not yet corrected against the euro?
(...) Overall, we still see potential for a move higher in EUR/JPY, EUR/CHF and EUR/USD - even as the current stretched price momentum has increased the risk of a correction, and even as the move in euro money market rates could be near completed. We would not currently add tactical long euro positions, though."