The Euro has stabilized against the Swiss Franc, trading at about 0.9243 after dropping to an 11-month low. This recovery follows encouraging business data from the Eurozone, with the Composite PMI climbing to 52.2 in October, the highest level in 17 months. The growth is mainly coming from the services sector, and manufacturing has seen gains for eight consecutive months. New orders are also rising at the fastest pace in two and a half years, leading to more hiring. In Germany, the Composite PMI is up to 53.8, driven by both services and manufacturing growth. On the other hand, France’s activity has declined for the fourteenth month, with its Composite PMI below 50.0 due to weak demand and political challenges. This situation affects overall growth in the Eurozone, even as Germany improves. The Swiss National Bank has kept its policy rate at 0%, citing the impacts of US tariffs on growth. They predict that GDP may drop below 1% by 2026. While inflation is currently positive, the bank expects it to stabilize over the next three years and is prepared to intervene to stop excessive appreciation of the Franc. Recent data shows the Euro has gained the most against the Canadian Dollar, as illustrated in a currency percentage change heat map comparing major global currencies. Considering the differing economic outlooks, there is a potential opportunity in the EUR/CHF pair. The Eurozone is showing solid growth, with the latest Composite PMI at a 17-month high, while the Swiss National Bank is worried about its growth prospects. This fundamental difference suggests that the recent bounce from the low of 0.9205 could signal the beginning of a more significant recovery. The main strength is coming from Germany, which is experiencing its fastest growth in over two years. Recent estimates from Eurostat for October indicate that core inflation remains steady at 2.9%, giving the European Central Bank little incentive to lower rates. This environment supports the Euro, especially against a currency backed by a central bank actively trying to prevent it from becoming too strong. We should think about buying call options on EUR/CHF with a strike price around 0.9300, set to expire in late December 2025. This strategy allows for defined risk while positioning for a continued rebound, using the recent 11-month low as a new support level. Data from the options market shows that one-month risk reversals for EUR/CHF have recently turned positive, indicating that traders are beginning to bet on upward movement for the first time since July 2025. The SNB’s willingness to intervene in currency markets should not be overlooked, as it could provide a potential floor for the pair. We recall the significant interventions the SNB made in the mid-2020s to curb the Franc’s strength, and their current concerns about US tariffs likely increase the chances of similar actions. The central bank has clearly stated it does not want a much stronger Franc. However, we need to be cautious about the risks posed by France’s ongoing economic contraction, which could limit the Euro’s potential. Additionally, any unexpected global risk-off event could lead to a flight to safety, temporarily benefiting the Swiss Franc. Upcoming US employment data will also be crucial, as a very strong report could disrupt the trend by enhancing the safe-haven appeal of the US Dollar and, by extension, the Franc.

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