The EUR\/CHF exchange rate rose for a second day due to softer Swiss inflation impacting the Franc. In October, the Swiss Consumer Price Index (CPI) experienced a decline of 0.3% on a monthly basis and a slight increase of 0.1% year-on-year, stirring disinflation concerns.<\/p>\n
The Swiss National Bank\u2019s inflation target range is between 0-2%. The latest data may push the SNB to consider cutting interest rates, with market predictions showing a 70% chance of a 25-basis-point cut to -0.25% within a year.<\/p>\n
The SNB’s policy rate stayed at 0.00% in September. However, SNB officials hinted at potential rate adjustments if economic conditions worsen. Switzerland’s SVME Purchasing Managers’ Index rose to 48.2 in October, while the Eurozone’s HCOB Manufacturing PMI returned to 50.<\/p>\n
Inflation measures the price rise in consumer goods and services, with central banks targeting a manageable rate of around 2%. High inflation typically strengthens a currency as it might lead to higher interest rates, attracting global capital. Conversely, low inflation tends to weaken a currency. Inflation impacts gold prices, with higher rates reducing its appeal compared to interest-bearing assets.<\/p>\n
The soft Swiss inflation figures from October 2025 are the main driver for us right now. With year-on-year inflation at just 0.1%, the Swiss National Bank (SNB) is under significant pressure to act against disinflation. This reinforces our view that the path of least resistance for the Swiss Franc is lower.<\/p>\n
We see a clear policy divergence forming between the SNB and the European Central Bank. While SNB board members are openly discussing a return to negative rates, recent ECB commentary has focused on wage growth persistence, suggesting they are in no rush to ease policy. This fundamental mismatch supports a continued rise in the EUR\/CHF exchange rate from its current level around 0.9300.<\/p>\n
For the coming weeks, we are looking at strategies that profit from a rising EUR\/CHF. Buying call options with strike prices around 0.9500 for the first quarter of 2026 offers a way to capture potential upside with a defined risk. The market is now pricing a high probability of an SNB rate cut within a year, which should continue to fuel this upward trend.<\/p>\n
Looking back, we remember the SNB\u2019s dramatic policy shifts, such as the 2015 de-pegging, which show they are not afraid to act decisively. During the last period of negative interest rates in Switzerland, EUR\/CHF spent years trading well above parity. While we are not forecasting a return to 1.10 overnight, history shows that when the SNB starts an easing cycle, the Franc can weaken substantially.<\/p>\n
Given this outlook, we are also considering selling out-of-the-money EUR\/CHF puts to collect premium, as we believe the SNB\u2019s dovish stance will provide a floor for the currency pair. Last week\u2019s Swiss unemployment data, which showed a slight tick up to 2.3%, adds to the domestic economic concerns and supports the case for SNB action. This makes short-term downside in EUR\/CHF seem less likely.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/CHF gains as soft Swiss inflation stirs rate cut bets; SNB may ease amid disinflation concerns.<\/p>\n","protected":false},"author":5,"featured_media":17024,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-33875","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts\/33875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/comments?post=33875"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts\/33875\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/media\/17024"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/media?parent=33875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/categories?post=33875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/tags?post=33875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}