The Euro has gained strength against the Swiss Franc, ending a four-day decline after reaching its lowest point since April 17. The EUR/CHF rate is now around 0.9290, but it’s struggling to exceed the 0.9300 resistance level. In France, political tensions have lessened, bringing relief to the markets. Prime Minister Sébastien Lecornu managed to survive two no-confidence votes by postponing pension reforms until after 2027. In Switzerland, SECO’s economic forecasts suggest a cautious outlook. GDP growth for 2025 is still at 1.3%, but the forecast for 2026 has been reduced from 1.2% to 0.9%. This change is due to US tariffs and a stronger Swiss Franc. The tariffs, set at 39%, have diminished the competitiveness of Swiss exports, especially in industrial and machinery sectors. Weak global demand and uncertainty are likely to limit growth into 2026, with inflation expected to be just 0.2% in 2025 and 0.5% in 2026. The EUR/CHF pair shows signs of short-term stabilization. Resistance is at 0.9300, and it could rise to 0.9326 or 0.9354. Support is at 0.9261; if it falls below that, it could drop toward 0.9200. This indicates weak momentum but not oversold conditions. Given the rise in EUR/CHF, there seems to be a short-term chance for growth fueled by reduced political fears in France. The bounce from the 0.9261 level is promising, but the key resistance at 0.9300 remains hard to break. This suggests that while the immediate downward pressure has eased, a strong upward trend is not yet in place. The outlook for the two currencies is diverging, which may lead to a higher EUR/CHF exchange rate in the coming weeks. Recent data reveals that Eurozone inflation is around 2.5%, making it unlikely for the European Central Bank to cut interest rates soon. Meanwhile, Swiss inflation is projected to be only 0.2%, putting pressure on the Swiss National Bank (SNB) to keep a cautious approach. The lower Swiss growth forecast, now at only 0.9% for 2026, reminds us of the stagnation seen in 2023 when GDP growth was flat. The SNB has historically acted decisively to weaken the franc when export growth is threatened, as seen in the notable events of 2015. Therefore, the Swiss franc may continue to decline, which would push EUR/CHF higher. For traders, this suggests that purchasing call options just above the 50-day moving average of 0.9354 could be a smart strategy. This limits risk if the pair doesn’t move higher but allows for significant gains if the economic divergence continues to drive the pair upward. The relatively low implied volatility typical for this pair may make these options appealing. Alternatively, one might expect the pair to stay within a range, caught between the strong resistance above 0.9300 and support near 0.9260. In this case, selling a strangle by writing out-of-the-money puts around 0.9200 and calls around 0.9400 could be profitable. This strategy would enable gaining premiums from the anticipated lack of a major breakout in either direction over the next month.

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