The Euro is currently trading lower against the Swiss Franc, with EUR/CHF approaching a three-month high. Traders are waiting for the Swiss National Bank’s (SNB) monetary policy decision on Thursday. Right now, EUR/CHF is about 0.9380, close to its highest level since early September. The SNB is expected to keep interest rates at 0.00% for the third consecutive time. A Reuters poll found that 38 out of 40 economists expect no change, while two predict a drop to -0.25%. Additionally, 21 of 25 economists believe the policy rate will stay at 0.00% until the end of 2026, although some anticipate a possible cut next year. In its September meeting, the SNB noted that inflation was close to the lower end of its 0-2% target, and the current settings were appropriate. Even with lower inflation pressures, a return to negative interest rates seems unlikely. On the Euro side, the European Central Bank (ECB) is also expected to keep rates steady on December 18. Recent ECB minutes showed everyone agreed on maintaining the current policy, which they view as stable. ECB officials have expressed a desire to wait for updated projections in December before making any changes. The EUR/CHF pair is near a three-month high at around 0.9380, with attention now on the SNB’s rate decision on Thursday. Swiss inflation for November 2025 was mild at 1.4%, leading many to expect the SNB will hold its policy rate at 0.00%. This means the central bank’s guidance will likely be more significant than the actual decision. Traders may want to consider short-dated options to prepare for any unexpected shifts in the SNB’s tone, as implied volatility is relatively low. While a hold is expected, any indication of concern regarding the strong franc could raise EUR/CHF, making nearby call options appealing. On the other hand, a hawkish surprise, although unlikely, could lead to a quick drop, benefiting put option holders. Looking ahead to the ECB meeting on December 18, a steady approach is also anticipated, particularly after Eurozone inflation fell to 2.8% in November. This creates a notable interest rate gap, with the ECB’s deposit rate at 2.75% compared to the SNB’s 0.00%. This favorable differential makes holding long EUR positions against the franc a strong strategy for yield-seeking traders. Overall, we are witnessing a familiar trend that has emerged over the past two years, echoing patterns from late 2023 and throughout 2024. The SNB has shown a high tolerance for low inflation to prevent a strong franc from negatively impacting its export-driven economy. This historical context suggests that the most likely movement for EUR/CHF is either upward or sideways.

here to set up a live account on VT Markets now