The Euro has strengthened against the Swiss Franc, breaking a four-day losing trend after hitting its lowest level since April 17. The EUR/CHF cross is trading around 0.9290, facing a challenge to breach the 0.9300 resistance level.

Political tensions in France have eased, providing relief to markets. This follows Prime Minister Sébastien Lecornu surviving two no-confidence votes by delaying pension reform until after 2027.

In Switzerland, economic forecasts from SECO paint a cautious picture. The GDP growth for 2025 remains at 1.3%, but the 2026 forecast has been lowered to 0.9% from 1.2%, affected by US tariffs and a stronger Swiss Franc.

These tariffs, at 39%, have hurt Swiss export competitiveness, particularly in the industrial and machinery sectors. Weak global demand and uncertainty are expected to limit growth into 2026, with inflation predicted to be 0.2% in 2025 and 0.5% in 2026.

The EUR/CHF pair shows signs of short-term stabilisation. Resistance is at 0.9300, with the potential to rise to 0.9326 and 0.9354. Support is at 0.9261, and a break below may lead to further declines towards 0.9200. This suggests weak but not oversold momentum.

Given the rebound in EUR/CHF, we see a short-term opportunity driven by easing political fears in France. The bounce from the 0.9261 level is encouraging, but the key psychological barrier at 0.9300 is proving difficult to break. This suggests that while the immediate downside pressure has eased, a strong bullish trend has not yet formed.

The fundamental outlook for the two currencies is diverging, which supports a higher EUR/CHF exchange rate in the coming weeks. Recent data shows Eurozone inflation is holding around 2.5%, making the European Central Bank unlikely to cut interest rates soon. In contrast, Swiss inflation is forecasted at a mere 0.2%, putting pressure on the Swiss National Bank (SNB) to maintain a dovish stance.

This weak Swiss growth forecast, cut to just 0.9% for 2026, reminds us of the economic stagnation seen back in 2023 when GDP growth was flat. The SNB has a history of acting aggressively to weaken the franc when exports are threatened, as we saw with the dramatic events of 2015. Therefore, the path of least resistance for the Swiss franc appears to be downwards, which would push EUR/CHF higher.

For traders, this suggests that buying call options with a strike price just above the 50-day moving average of 0.9354 could be a prudent strategy. This approach limits our risk if the pair fails to break higher but provides significant upside if the fundamental divergence between the two economies continues to drive the pair up. The relatively low implied volatility typical for this pair may make such options attractively priced.

An alternative view is that the pair will remain range-bound, caught between the strong technical resistance above 0.9300 and support near 0.9260. In this scenario, selling a strangle by writing out-of-the-money puts around 0.9200 and calls around 0.9400 could be profitable. This strategy would allow us to collect premium from the expected lack of a major breakout in either direction over the next month.