Morgan Stanley strategists are recommending shorting EUR/CHF, betting that rising risk aversion and rising asset risk premiums in the Eurozone will drag the euro down. David Adams, Koichi Sugisaki, Andrew Watrous, and Alexander Scholefield wrote in Wednesday's research report that shorting EUR/CHF can hedge against “further increases in fiscal and political risk premiums” and the risk that the ECB will shift to more dovish pricing due to fluctuations in the bond market. The strategist said, “Although the market is paying close attention to widening interest spreads, the increase in the euro risk premium is not significant.” The research report mentioned that the SNB's concern about the strengthening of the Swiss franc is a risk factor for the EUR/CHF short trade, which may push up this currency pair. The strategist suggests shorting EUR/CHF with a target of 0.90 and a stop loss of 0.96. The bank continues to recommend shorting EUR/CHF, and it is expected that the euro will generally weaken against most currencies. The strategist said that EUR/CHF is likely to continue to decline, but technical aspects and position conditions indicate that consolidation may begin in the short term.

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