The EUR/CHF currency pair made a dramatic move on the forex market today, soaring 1.6%—its largest single-day gain since 2015. The rally propelled the euro to its highest level against the Swiss franc since July 2024, signaling a shift in sentiment and market dynamics.
What’s Driving the EUR/CHF Rally?
The sharp rise in EUR/CHF can be attributed to several key factors, including changing central bank policies, economic data releases, and shifting investor sentiment.
1. Market Repricing of SNB Policy Expectations
The Swiss National Bank (SNB) has been under pressure as inflation remains subdued in Switzerland. Recent commentary from SNB officials has fueled speculation that the central bank may adopt a more dovish stance, potentially cutting interest rates earlier than previously expected. A loosening of monetary policy would weaken the Swiss franc, making the euro more attractive in comparison.
2. Eurozone Economic Resilience
Recent economic data from the Eurozone has been stronger than anticipated, boosting confidence in the European economy. A rise in manufacturing output, improved business sentiment, and expectations of higher interest rates from the European Central Bank (ECB) have contributed to the euro’s strength.
3. Reduced Safe-Haven Demand for the Franc
The Swiss franc is traditionally seen as a safe-haven currency, attracting investors during times of global uncertainty. However, with financial markets stabilizing and risk appetite returning, traders are moving away from the franc in favor of higher-yielding assets, leading to a depreciation of CHF against the euro.
Historical Context: Why This Move Is Significant
A 1.6% daily gain in EUR/CHF is a rare event, not seen since 2015. The last time such a sharp move occurred was during the infamous “Swiss Franc Shock” in January 2015, when the SNB unexpectedly removed its cap on EUR/CHF at 1.20, causing extreme volatility. While today’s move is driven by more gradual economic shifts rather than a sudden policy change, its magnitude highlights growing market momentum.
Technical Outlook: Where Next for EUR/CHF?
With EUR/CHF breaking key resistance levels, traders will be watching for further upside potential. If the bullish momentum continues, the next significant resistance level could be near 1.02–1.03, levels last seen in mid-2024. However, a pullback is possible if the SNB intervenes verbally or if broader market sentiment shifts.
