Insights 
VT 
Swiss Economy Performance
The Swiss economy continues to perform well, despite longstanding issues with CHF strength. Geopolitical concerns may increase safe haven demand, keeping the CHF well supported in the near term. Consequently, 1- and 3-month EUR/CHF forecasts have been adjusted to 0.93 from 0.94.
The FXStreet Insights Team comprises journalists and analysts, offering selected observations and insights from market experts. Their content includes commercial notes and additional analysis from various contributors.
Given the Swiss National Bank’s reluctance to signal rate cuts, the primary support for a strong franc remains intact for the coming weeks. Latest figures from earlier this month show Swiss inflation holding firm at 1.8%, well below the Eurozone’s more stubborn 2.7%, giving the SNB little reason to act. Traders should therefore consider positioning for continued franc strength against the euro.
Forecasts And Options Strategy
With forecasts now targeting a EUR/CHF exchange rate of 0.93, purchasing put options on the pair offers a direct way to profit from this expected decline. This strategy allows for capitalizing on a move towards levels we have not seen sustained since the European energy crisis back in 2023. Selling out-of-the-money call options could also be used to finance these positions, betting that the pair has limited upside.
However, the risk of sudden intervention from the SNB to weaken the franc cannot be ignored, as we all remember the market chaos in January 2015. This makes owning options, which have a defined maximum loss, a more prudent strategy than shorting futures contracts directly. Implied volatility in EUR/CHF options may be underpricing the potential for a surprise policy shift.
The ongoing geopolitical uncertainty, particularly with recent trade tensions in the South China Sea, continues to fuel safe-haven demand for the franc. The CBOE Volatility Index (VIX) has crept back up over 19 in recent weeks, indicating a growing nervousness in global markets that typically benefits the Swiss currency. This backdrop reinforces the view that the franc will remain well-supported against the euro through the end of the year.
