EUR/CHF: ECB to bring some near-term support by pushing back against prospects of rate cuts – Rabobank

FXStreet Insights Team FXStreet

Last week EUR/CHF hit levels a whisper above 0.94 before finding buyers. Economists at Rabobank analyze the pair’s outlook ahead of ECB and SNB meetings this week.

SNB will employ more dovish language

The recent move lower in EUR/CHF is likely a function of accelerated bets in the market regarding the prospects of ECB rate cuts this year. In our view, the ECB will use this week’s policy meeting to push back against these expectations. This should bring some near-term support for EUR/CHF. However, if the SNB were to come across as hawkish at its policy meeting this week then EUR/CHF would be at risk of pushing to new lows.

Now that CPI inflation is back within the SNB’s target range, we expect that the SNB will employ more dovish language this week, to reduce the risks of further CHF strength and lower the chance that it may have to intervene in the market to weaken the CHF.

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FXStreet Insights Team

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