Strategists at Morgan Stanley have reintroduced a recommendation to short EUR/CHF, betting that rising safe-haven sentiment and increasing risk premiums on eurozone assets will weigh on the euro.

In a report released on Wednesday, David Adams, Koichi Sugisaki, Andrew Watrous and Alexander Scholefield wrote that shorting EUR/CHF can serve as a hedge against "a further rise in fiscal and political risk premiums," as well as bond market volatility that could prompt markets to reprice expectations for European Central Bank policy in a more dovish direction.

"Despite widespread market attention on widening spreads, the increase in the euro risk premium has actually not been that large," the strategists said.

They wrote that the Swiss National Bank's concerns about franc strength pose a risk to the short EUR/CHF trade, potentially pushing the currency pair higher.

The strategists recommend shorting EUR/CHF with a target of 0.90 and a stop-loss at 0.96.

They continue to recommend shorting EUR/AUD and expect the euro to weaken against most currencies.

They said EUR/USD could fall further, though technical and positioning conditions suggest a period of consolidation may be possible in the near term.