CHF/EUR Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and trading range.
Key drivers:
- Rate gap: The Swiss National Bank is considering potential negative interest rates to curb the strong CHF, contrasting with the European Central Bank's steady rates amid economic resilience.
- Risk/commodities: Oil prices have surged, positively impacting the CHF through safe-haven demand and indirectly influencing the euro's competitiveness, given its reliance on energy imports.
- Macro factor: Eurozone inflation has fallen below target, leading to speculation about future ECB rate cuts, which could weaken the euro.
Range:
Expect movement to drift within the recent stable range, with potential to test extremes depending on shifting macroeconomic indicators.
What could change it:
- Upside risk: A shift in the ECB's policy tone towards rate hikes could support the euro against the CHF.
- Downside risk: Renewed concerns over the strength of the eurozone's economy might push the CHF higher, particularly amid ongoing geopolitical tensions.
