TD Securities links the Swiss franc’s weak run since the late-February 2026 Iran shock to its low-yield carry profile and to moves in gold. CHF has been among the poorest-performing global currencies in that period, alongside SEK, with a brief haven bid in the first half of March giving way to a broader downtrend. With the Swiss National Bank expected to keep its policy rate on hold and 2026 sight deposit changes described as muted, TD argues macro factors and global rate paths are taking a larger role in steering CHF crosses such as EUR/CHF.
The note also points to gold as an additional driver, arguing that weaker bullion has mattered alongside carry in pushing EUR/CHF higher. TD outlines that the rally could stall if the ECB pauses rate increases after September; it also frames further gold declines as a condition for sustained CHF softness. Under a scenario of one more ECB hike in September followed by a hold, the EU–SZ rate differential is expected to peak, while gold is projected to drop to $3,900/oz in the near term before recovering. TD’s year-end 2026 call leaves EUR/CHF around 0.93.
Swiss Franc Outlook and Key Macro Drivers
We believe derivative traders should prepare for a trend reversal in the Swiss Franc as its post-February slump begins to lose steam. Since the geopolitical shock earlier this year, the Franc has been one of the weakest major currencies due to low-yielding carry dynamics. With the Swiss National Bank keeping its policy rate steady, global rate decisions will now dictate the currency’s path.
We advise closely watching gold prices, which heavily influence the Franc’s valuation. While gold has seen massive gains recently, we expect a short-term drop toward $3,900 per ounce before it starts a new upward trend. Traders can capitalize on this temporary dip by buying near-term gold put options.
Tactical Strategies for Currency and Options Markets
In the currency options market, we recommend buying EUR/CHF put options to prepare for a looming peak in the cross-rate. The euro’s strength is expected to cap out once the European Central Bank pauses its rate-hiking cycle after September. We anticipate EUR/CHF will drift back down to the 0.93 level by the end of the year.
We also suggest unwinding short-CHF carry trades, as the risk-to-reward ratio is no longer favorable. Muted changes in Swiss sight deposits show that local monetary factors are stable, leaving the currency highly sensitive to global shifts. A sudden drop in global yields could trigger a rapid short-squeeze in the Franc, catching unprepared traders off guard.
