- The EUR/CHF is tracking upwards after the SNB held rates at 0.00% but still retains the weapon of intervention to curtail CHF strength.
Current Setup
EUR/CHF is up 0.4% on the day after the Swiss National Bank kept its policy rate at 0.00% and emphasized its willingness to intervene to curb excessive Franc strengthening. In other words, the SNB is ready to buy US Dollars and Euros while selling the Swiss franc to increase demand for these foreign currencies and push up Franc supply so the CHF weakens relative to them.
Today’s SNB decision was an important step in the bank’s quest to balance rising inflation against excessive CHF appreciation. So today’s decision was not a simple hold at 0.00%; it was a move toward using FX intervention as an exchange-rate control measure without shifting rates into negative territory.
This decision leaves the interest rate differential between the CHF and the EUR + USD higher than at the last policy meeting, as the Fed and ECB have both hiked 25 bps this month. For EUR/CHF specifically, the 0.00% policy rate = increased carry advantage for Euro holders. However, safe-haven demand for the Franc is a limiting factor.
The key level is 0.9350, below which CHF momentum accelerates and increases the SNB intervention risk.
SNB decision — what happened?
The Swiss National Bank made no change to its policy rate, leaving it at 0.00%
The Swiss apex bank also retained the discount on sight deposits above the 0.25 percentage-point threshold, while explicitly indicating its willingness to intervene in the foreign-exchange market when necessary to maintain normal monetary conditions (i.e., to curb excessive CHF strength).
The key point is the rise in Swiss inflation from 0.6% in May to 0.8% in August, primarily due to goods inflation from higher oil prices. The SNB’s inflation expectations are 0.7%, 0.8% and 0.8% for 2026, 2027 and 2028, respectively. This assumes a forecast policy rate of 0.00%.
The message is that the SNB has ruled out rate hikes as a means of inflation control, as it expects no rise in inflation in its 3-year forecast.
What this means for EUR/CHF
SNB Chairman Martin Schlegel has repeatedly reiterated the SNB’s willingness to intervene to weaken a Franc that has gained significant strength due to safe-haven demand. Today’s statement reinforces the FX-intervention narrative.
EUR/CHF downside risk will be limited if the SNB intervenes. But that doesn’t create a price floor. Instead, traders should look at the charts for direction. I took time to describe the scenario that will likely play out if the SNB towed the line it did today in this video here.
EUR/CHF Forecast Scenarios
Base case: Limited upside to keep the pair at 0.9350–0.9450. The SNB’s latest move will limit short-term CHF appreciation, but any short-term upside will be capped as safe-haven demand kicks in to prevent a large-scale recovery.
Bull EUR/CHF case→ Major upside above 0.9400 leads to exposure of upside targets at 0.9440 initially, with a possibility to extend to 0.9480.
Bear EUR/CHF case→ Downside move with risk of intervention if the pair pushes below 0.9350. This brings up downside targets at 0.9300 and potentially 0.9250, with intervention risk rising with increasing CHF strength.
Technical Outlook
The push from the 0.9390 support must break past the recent weekly high at 0.9476 to reclaim the 0.9514 resistance and prior highs of Jan/Feb 2025. Above this barrier, 0.9652 serves as the next upside target.
However, a retracement that breaks the 0.9390 support unlocks access to downside targets at 0.9268 initially, followed by 0.9180 if there is a deeper retracement.