We see a tactical opportunity to short CHF/JPY based on a shift in both macro fundamentals and central bank dynamics. The Swiss franc has lost much of its prior haven appeal following the Swiss National Bank’s (SNB) surprise rate cut in March and its clear signal that further easing remains on the table. This dovish stance contrasts sharply with the Bank of Japan’s (BoJ) gradual normalization path. While the BoJ remains cautious, it has begun exiting its ultra-loose monetary policy framework, opening the door to further policy tightening, especially if inflation and wage growth show persistence.

From a valuation standpoint, the franc remains historically overvalued relative to the yen on a real effective exchange rate (REER) basis. As yield differentials compress between the two currencies, this overvaluation looks increasingly difficult to justify. Additionally, safe-haven flows previously a key tailwind for CHF are subsiding amid improved global risk sentiment, further undermining support for the franc.

SHORT CHFJPY

Jun 02 2025