The EUR/CHF exchange rate has reached a two-week high as the Swiss Franc weakened against major currencies. This shift is due to a positive mood in global markets, boosted by optimism surrounding the upcoming Trump-Xi meeting at the APEC summit. Many traders hope for a US-China trade agreement, which has lifted global stock prices and reduced the demand for safe-haven assets like the Swiss Franc. Currently, the EUR/CHF rate is about 0.9274, which marks a 0.30% increase after hitting an intraday low of 0.9238. The Swiss ZEW Expectations Index showed a noticeable improvement, rising to -7.7 in October from -46.4. This suggests a less gloomy outlook for the Swiss economy over the next six months, but it hasn’t strengthened the Franc, as broader market trends took priority while traders waited for the Federal Reserve’s interest rate decision.

Eurozone Monetary Policy

In the Eurozone, the spotlight is on the European Central Bank’s (ECB) upcoming policy decision. The ECB is expected to keep the Deposit Facility rate steady at 2.00% for the third time. Stable inflation and better business conditions back this decision, which could support the Euro’s strength. The Swiss Franc has shown mixed performance against different currencies, being strongest against the British Pound. Although the market has a familiar feel, the reasons behind the EUR/CHF strength have changed significantly since the Trump-Xi trade summits. Back then, short-term risk sentiment influenced the pair and caused temporary weakness in the Swiss Franc. Today, the situation is more structural and closely linked to central bank policies. The main factor driving the current trend is the large difference in interest rates between the Eurozone and Switzerland. By late October 2025, the ECB’s deposit rate is 3.50%, while the Swiss National Bank’s policy rate is just 1.75%. This gap makes holding Euros more appealing than holding Francs. This difference in policy is backed by ongoing inflation trends. Eurozone inflation hovers around 2.8% year-over-year, while Switzerland keeps its inflation much lower at about 1.5%. This gives the ECB a strong reason to maintain higher rates for a longer period.

Derivative Trading Opportunities

For those trading derivatives, this situation presents a clear opportunity in the weeks ahead. A long position in EUR/CHF offers an attractive positive carry, allowing traders to profit just by holding the position over time. This could mean selling out-of-the-money puts to collect premiums, as the interest rate difference should put a solid floor under the pair. Another strategy to consider is buying call options on EUR/CHF that expire in one to two months. With the pair currently around 0.9650, a move towards the key level of parity (1.0000) seems more likely if the ECB hints at a hawkish line as we approach year-end. This approach provides a defined risk with significant potential for upside. However, we must stay cautious about the safe-haven status of the Franc, which remains unchanged over time. If there is an unexpected global economic slowdown or rising geopolitical tensions, it could lead to a swift move towards safety. This would strengthen the Franc and could challenge our long positions in the Euro. Create your live VT Markets account and start trading now.

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