The Euro has steadied against the Swiss Franc, rebounding from an 11-month low near 0.9205 and trading around 0.9240. This minor recovery is attributed to technical corrections as traders consider market signals from the European Central Bank (ECB) and Swiss National Bank (SNB).

The ECB is expected to maintain its benchmark rate at 2.00% until at least 2027, amidst stable inflation and moderate growth prospects. The Eurozone’s GDP growth is projected at 1.2% in 2025, with inflation nearing 2.2%. ECB Vice President Luis de Guindos stated that current interest rates are adequate, and the Governing Council will monitor on a meeting-by-meeting basis.

Swiss National Bank Expectations

Meanwhile, the Swiss National Bank retained its policy rate at 0.00% in September, deeming it suitable for price stability. SNB Chair Martin Schlegel noted a slight increase in inflation expectations and potential economic risks from planned US tariffs on pharmaceuticals. The SNB is prepared to modify monetary policy if necessary.

The European Central Bank influences the Euro through interest rates and monetary policy, aiming to maintain inflation at 2%. Quantitative easing and tightening are tools utilised by the ECB to manage economic conditions, with the former typically weakening and the latter strengthening the Euro.

Given the rebound in EUR/CHF from its 11-month low, we see a market caught between two very predictable central banks. The European Central Bank has signaled it will hold its 2.00% rate steady, creating a stable but unexciting outlook for the Euro. This suggests that sharp upward moves in the pair are unlikely without a new catalyst.

Data released by Eurostat last week supports this view, showing September 2025 core inflation at 2.1%, firmly within the ECB’s comfort zone. The latest flash PMI readings for October 2025 also point to the moderate 1.2% GDP growth forecast being on track. For derivatives traders, this low-volatility environment makes selling options premium an attractive strategy, particularly selling out-of-the-money calls above the 0.9400 level.

Trading Opportunities

The technical bounce from the 0.9205 low presents an opportunity to consider strategies that profit from range-bound price action. We believe selling strangles, which involves selling both a call and a put option, could be effective if the pair remains stuck between 0.9200 and 0.9450. The minimal policy divergence between the ECB and the Swiss National Bank reinforces the view that a major trend is not imminent.

On the Swiss side, the SNB’s caution is warranted, with September 2025 inflation data showing a 1.5% year-over-year rise, which is low but ticking upward. The main risk we are monitoring is the potential for U.S. tariffs on pharmaceuticals, which could significantly impact Swiss exports and weaken the Franc. This remains a key wildcard that could break the pair out of its expected range.

Looking at historical data, the low implied volatility we see in EUR/CHF options today is reminiscent of the market in late 2023, before a sudden policy shift caused a spike. Therefore, while selling premium is attractive, one could consider buying cheap, long-dated call options as a hedge against any negative surprises for the Swiss economy. These calls would protect against a scenario where tariff news suddenly drives the EUR/CHF pair higher.

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