CURRENCY strategists love to make dramatic pronouncements that capture the imagination of the trading public and seal their reputation as brilliant forecasters. At the height of the Eurozone credit panic last year, more than a few analysts predicted that the euro-dollar pair would hit parity within months. Of course, as negative opinion reached its crescendo, buying euro-dollar instead of selling it would have been a much wiser choice, as it rose from $1.2000 to $1.4900.

Currencies can be affected by so many unpredictable factors that any analysis longer than a few days forward is difficult. That having been said, I am beginning to wonder if the headline makers may be right this time.

The new fashionable forecast in the currency market is for euro-Swiss franc to reach parity. Just a few weeks ago, the pair traded above the SFr1.2000 level and such a call was absurd. Since then, it has fallen by 10 big figures, breaking below the psychologically key SFr1.1000 barrier for the first time ever on Tuesday.

Euro-Swissie has become the perfect “pox-on-both-your-houses” trade. Investors are fleeing the euro, on fears that Italy may be the next sovereign to come under the assault of the shorts, while shunning the dollar, as the US economy looks ready to tip into a recession after a political battle over the budget that has left US voters demoralised and disgusted, pushing consumer sentiment to new lows.

Meanwhile, the Swiss economy remains a bastion of strength and stability, with latest retail sales figures showing a sharp rise of 7.4 per cent, while PMI readings actually increased to 53.5 from 52.3 the month prior. Therefore, euro-Swissie to parity is a much more probable scenario than just a few months ago. With Eurozone debt woes showing no signs of easing and the US economy spiralling into an economic freefall, the currency Cassandras may be right this time.