The Euro is trading lower against the Swiss Franc, with EUR/CHF nearing a three-month high as traders await the Swiss National Bank’s (SNB) monetary policy decision on Thursday. At present, EUR/CHF is around 0.9380, close to its peak since early September.
The SNB is expected to keep interest rates unchanged at 0.00% for the third time in a row. A Reuters poll shows that 38 out of 40 economists predict no change, while two expect a rate of -0.25%. Furthermore, 21 of 25 economists anticipate the policy rate will remain at 0.00% until the end of 2026, though a few foresee a potential cut next year.
Inflation And Interest Rate Expectations
At its September meeting, the SNB indicated that inflation was nearing the lower end of its 0-2% target, with the current settings deemed appropriate. Despite reduced inflation pressures, the possibility of returning to negative interest rates remains low.
On the Euro side, the European Central Bank (ECB) is expected to keep rates steady on December 18. Recent ECB minutes showed unanimous support for maintaining the current policy stance, describing it as stable. ECB officials have reiterated their intent to wait for December’s updated projections before considering any changes.
The EUR/CHF cross is sitting near a three-month high around 0.9380, and our focus is now squarely on the Swiss National Bank’s rate decision this Thursday. With Swiss inflation for November 2025 coming in at a benign 1.4%, expectations are firmly anchored on the SNB holding its policy rate at 0.00%. This sets up a scenario where the central bank’s forward guidance will be more important than the decision itself.
We believe traders should look at short-dated options to position for any surprise in the SNB’s tone, as implied volatility appears relatively low. While a hold is priced in, any hint of concern about the franc’s persistent strength could push EUR/CHF higher, making near-term call options attractive. Conversely, a hawkish surprise, though unlikely, would cause a sharp drop and reward put option holders.
European Central Bank Meeting Expectations
Looking ahead to the European Central Bank meeting on December 18, a steady hand is also expected, especially after November’s Eurozone inflation eased to 2.8%. This leaves a significant interest rate differential, with the ECB’s deposit rate at 2.75% compared to the SNB’s 0.00%. This positive carry continues to make holding long EUR positions against the franc a fundamentally appealing strategy for yield-focused traders.
We are seeing a playbook that has become familiar over the past two years, echoing the patterns observed back in late 2023 and throughout 2024. The SNB has consistently shown a high tolerance for inflation at the lower end of its target in order to avoid a dangerously strong franc from harming its export-driven economy. This historical precedent suggests the path of least resistance for EUR/CHF remains to the upside or sideways.
