Following the Swiss National Bank's (SNB) decision to reduce its policy rate by 25 basis points to 1.50%, the EUR/CHF currency pair is poised for a potential uptrend in the second quarter of the year. The SNB's move, which represents its first rate cut since 2019, reflects concerns over persistently low inflation levels and the possibility of further cuts in June. Despite the adjustment, inflation is projected to remain below target levels.

Chair Jordan's statements regarding price stability and the currency since January have increased the likelihood of such a policy shift. The SNB's readiness to intervene in the foreign exchange market further reinforces expectations of a potential upward trajectory for both EUR/CHF and USD/CHF pairs.

Revisions to inflation forecasts indicate downward adjustments, with this year's estimate lowered to 1.4% and next year's to 1.2%. Weak demand from international markets and the appreciation of the Swiss franc have also contributed to subdued growth prospects, with the economy expected to expand by around 1% this year, potentially leading to a gradual rise in unemployment.

From a technical perspective, EUR/CHF has cleared a significant barrier at 0.9775, representing a 61.8% retracement from January 2023. While an initial pullback is currently occurring, it is important to monitor support levels, particularly near last week's low of 0.9610, as they may indicate the strength of the ongoing uptrend.

EURCHF Higher on Q4 2024

Mar 27 2024