EUR/CHF is on the rise as geopolitical tensions ease, causing the Swiss Franc to lose some of its safe-haven appeal. According to analysts at Société Générale, even though the EUR/USD has not performed well, less demand for safe-haven assets is allowing EUR/CHF to gain. Switzerland’s economy shows signs of weakness. The December manufacturing PMI fell to 45.8, much lower than the expected 49. This drop, along with a GDP contraction in the third quarter, indicates economic problems that lessen the Swiss Franc’s safe-haven status. Combining CHF shorts with NOK longs looks attractive due to Norway’s higher interest rates.

The Swiss Franc’s Safe Haven Premium

The Swiss Franc is losing some of its safe-haven advantage, which helps drive up EUR/CHF. This trend began after the Christmas peak in 2025 as global risk sentiments improved. The franc’s decline is occurring even as the Euro has weakened against the US Dollar. The Swiss economy faces clearer downside risks, limiting the franc’s protective appeal. The December 2025 manufacturing PMI fell to 43.2, indicating a deepening industrial downturn. This decline follows a 0.2% GDP contraction from last year’s third quarter, reflecting a shaky economic outlook. In the upcoming weeks, there are opportunities for bullish option strategies on EUR/CHF. Buying call options that expire in February or March 2026 could take advantage of ongoing upward momentum. This strategy allows traders to profit from a rising spot price while managing risk.

Interest Rate Opportunities

The interest rate gap between Switzerland and other countries also presents an opportunity. The Swiss National Bank held its policy rate at 1.50% through the end of 2025, while Norges Bank maintained a higher rate of 4.50%. Using forward contracts to short the franc against currencies like the Norwegian Krone can help capture positive carry. Implied volatility for EUR/CHF options is low, consistent with historical trends for this pair. One-month volatility is around 4.2%, close to the year’s low. This low volatility makes buying options cheaper, providing a cost-effective way to position for gradual appreciation. Create your live VT Markets account and start trading now.

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