Swiss Franc extended gains against Euro this week, driven primarily by risk-off sentiment. French political turmoil hit the common currency, and the scale of Franc’s move highlighted how haven demand eclipsed domestic policy and economic debates.
SNB Vice Chairman Antoine Martin’s remarks on inflation and negative rates provided some context, but they did little to alter the market narrative. Martin noted the central bank sees no risk of deflation and expects inflation to rise, while stressing that the bar for reintroducing negative rates is high.
Domestic developments, including the 39% U.S. tariffs on Swiss exports and today’s Q2 GDP release, carry weight in principle. But markets view these as secondary in the near term, with the real impact of tariffs unlikely to be visible until later this year.
Technically, this week’s extended decline in EUR/CHF suggests that corrective rebound from 0.9218 has completed with three waves up to 0.9452. That came after rejection by falling 55 W EMA (now at 0.9359). Outlook is clearly still bearish. Deeper fall should be seen to 0.9265 support in the near term. Firm break there will open deeper decline, at least for a retest of 0.9204 support (2024 low).
