The Euro has dropped against the Swiss Franc for four days in a row, hitting its lowest point since May 5. The EUR/CHF pair is now close to 0.9280, down almost 0.60% this week, as the Franc gains strength due to demand for safe assets amid trade tensions and approaching US tariff deadlines. US President Donald Trump has postponed a tariff deadline with Mexico by 90 days, keeping current tariffs while warning of new ones for countries that don’t reach a deal by August 1. While there was a phone call about a trade deal with Mexico’s President Claudia Sheinbaum, uncertainty remains high, causing increased anxiety about trade globally. In June, Switzerland’s retail sales rose by 3.8% compared to last year, far exceeding expectations and boosting the Franc’s value. Monthly sales also increased by 1.5%, recovering from a previous decline and making the currency more appealing as a safe haven. Meanwhile, the Eurozone’s GDP grew by just 0.1% in the second quarter, showing a significant slowdown. Attention now turns to the Eurozone’s July inflation data, which will be critical in guiding the European Central Bank’s future actions, as the region faces ongoing low price pressures and sluggish growth. The Core Harmonized Index of Consumer Prices, which excludes volatile items, will help track inflation trends and impact the Euro’s potential strength. Given the Euro’s weakness against the Swiss Franc, a clear trend appears likely to continue in the weeks ahead. The EUR/CHF pair faces pressure from a solid Franc and a struggling Euro. This situation creates an opportunity for bearish strategies on this currency pair. The Franc’s attractiveness comes from global uncertainty and domestic strength. Trade worries, particularly with the US tariff deadline approaching today, August 1, enhance the Franc’s safe-haven status. Additionally, the Swiss National Bank raised its policy rate to 1.75% in June 2025, which is a stark contrast to the Eurozone’s economic outlook. In contrast, the Euro struggles with the Eurozone’s stagnant Q2 GDP growth of just 0.1%. We are now anticipating the July inflation report, where recent forecasts from Bloomberg expect core inflation to reach 1.9%, still below the European Central Bank’s target. Weak data like this will likely keep the ECB supportive of a dovish approach, limiting any potential boost for the Euro. In the coming weeks, traders should think about purchasing put options on the EUR/CHF pair. Choosing contracts that expire in late August or September 2025 would give enough time for the market to react to the Eurozone’s inflation data and any guidance from the ECB. This strategy could allow for profits from a continued decline in the pair’s value. It’s worth noting that implied volatility for EUR/CHF has increased to about 6.8%, suggesting that the market is prepared for larger price swings. This situation is reminiscent of the early 2010s when economic stress in the Eurozone led to a steady move towards the safety of the Swiss Franc. We expect a similar trend to emerge, although perhaps less severe.

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