EUR/CHF and GBP/CHF are rolling over ahead of Thursday's Swiss National Bank meeting, even though a hold at 0% is already close to fully priced. The Swiss Franc is the second-strongest major currency this week, and the driver looks less like the SNB and more like falling oil easing inflation pressure elsewhere.
Franc Strength Is Turning Before the SNB Even Meets
EUR/CHF and GBP/CHF are both rolling over just as the SNB prepares to leave rates at 0% on Thursday, with the move already under way before the decision itself. That timing matters: a hold is close to fully priced, so the meeting looks unlikely to generate a major repricing in the Franc on its own. Yet the Franc is already the second-strongest major currency of the week, behind only the Dollar.
That points to a different mechanism. Falling oil prices are easing inflation pressure across other major economies, which reduces the need for central banks elsewhere to keep widening their rate advantage over Switzerland. With the SNB pinned at 0%, the Franc is strong against EUR, JPY, GBP, CAD, AUD, and NZD, and weaker only against USD. The Dollar and Franc are both strong this week, but for different reasons: USD strength reflects a more hawkish Fed repricing, while CHF strength looks more consistent with relief in rate-differential pressure as oil retreats — a working market thesis rather than an established correlation.
A Hold Looks Close to a Formality
The policy backdrop gives the SNB little reason to move. A Swiss Bankers Association survey found every respondent expects the policy rate to stay at 0% through the rest of 2026, while 60% see no change through 2027. Inflation backs that up: headline CPI accelerated from 0.4% to 0.8% year-on-year in August, driven mainly by petroleum prices rising 25.2% y/y. Excluding energy, inflation was just 0.3%, well inside the SNB's 0-2% target range, so tomorrow's main signal may come through the conditional inflation forecast rather than the policy rate itself.
Switzerland's central bank also retains the option of buying foreign currency if the Franc appreciates rapidly and excessively, particularly during a renewed safe-haven episode, though there's little urgency given the Franc had weakened moderately against the Euro before this week's rebound. Imported goods account for around 22% of Swiss CPI, so a sharp appreciation could still exert disinflationary pressure even though the current move hasn't reached that scale.
Technical Picture Shows a Synchronized Reversal
EUR/CHF appears to have formed a short-term top at 0.9478 after failing near the upper boundary of its medium-term rising channel, with bearish daily MACD divergence suggesting momentum was fading before the decline. The next test is the 55-day EMA around 0.9356, with a firm break exposing the 38.2% retracement at 0.9331.
GBP/CHF is showing the same pattern. A short-term top likely formed at 1.1066 after the pair failed to sustain its move above its own rising channel, again with bearish MACD divergence. The immediate downside focus is the 55-day EMA near 1.0909, which exposes the 38.2% retracement at 1.0838 on a sustained break.
Both pairs are correcting after extended advances with deteriorating momentum at the same time, which strengthens the case for a broader Franc-driven move rather than two unrelated currency stories. With the SNB decision and the Trump-Xi summit landing in the same Thursday session, FX volatility may end up coming from outside Zurich even if the Swiss central bank delivers exactly what markets expect.
Source: ActionForex
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