EUR CHF and the Swiss Franc’s Strength at Risk
Over the weekend, SNB President Martin Schlegel delivered several comments that, as often happens with central bank communication, offer clues about the future path of the Swiss franc. Schlegel noted that Switzerland may require even more accommodative monetary policy. This is striking considering that since February 2024 the SNB has cut rates from 1.75 percent to the current zero percent, making it the only major central bank among developed economies to return to that level.
Despite what appears to be a policy disadvantage, the Swiss franc, which has displayed a multi decade appreciation trend against major currencies and especially against the euro, has not weakened. Instead, it has stabilised within the 0.92 to 0.945 area.
One key reason lies in the SNB’s open market operations. Since 2022, as global inflation rose, the central bank sold sizeable quantities of foreign currency reserves to purchase francs. This strengthened the CHF and reduced the domestic impact of higher import prices, helping Switzerland keep inflation markedly lower than its peers.
Schlegel also mentioned that negative rates remain a possibility. He referenced Switzerland’s substantial gold reserves, the seventh largest in the world, suggesting that the country retains balance sheet strength. The implication is clear. Negative rates could weaken the CHF considerably, and with foreign exchange reserves now much lower than in past years, gold holdings provide an additional anchor for the currency.
Medium Term Structure and Market Context
The franc’s appreciation against the euro reached its strongest point in August 2024, when EUR CHF touched 0.9211. That level has remained the cycle floor, tested twice more since then and broken only once for a single session on 4 November, when the pair briefly traded at 0.9180.
Across the past fifteen months, EUR CHF has moved within a broad 0.9210 to 0.9450 range, with only a brief overshoot toward 0.9630 in March this year. The potential shift in SNB policy makes this range increasingly relevant, particularly because the long term descending trendline is now very close to market levels. This trendline currently intersects near 0.9370 and originates from the March 2021 high around 1.1150. It has been tested repeatedly and remains a significant structural marker.
Another important development is that the long term moving averages, the 50 day and 200 day, now sit near current prices at 0.9296 and 0.9366. Both have flattened, suggesting that the multiyear downtrend is losing momentum. The RSI has also turned higher after showing mild bullish divergence.
Technical Outlook and Key Levels
In our view, the 0.9370 level is critical from a medium to long term perspective. A sustained break above this level for several sessions would indicate that the multi year bearish trend in EUR CHF has ended. Yesterday’s close at 0.9315 suggests that the pair may approach this area soon.
If an immediate breakout does not occur, price could retrace toward the 50 day moving average and the psychological 0.93 level. Conversely, if the trendline is broken and price holds above it for multiple days, the market would be signalling a meaningful shift in the underlying strength of the Swiss franc.
