EUR/CHF falls to key technical juncture as US-China trade war rages on

The SNB has already been pushed to the limits of their latest policy cycle but it looks like they might just have to return to zero or negative interest rate policy again. The Swiss franc has been one of the biggest beneficiaries in the FX space amid Trump's tariffs saga, that especially with the dollar itself falling out of favour.

This is all pushing EUR/CHF down to under 0.9300 again with the lows now starting to test key support from what we have seen during the course of 2024.

With Swiss inflation well under control, the last thing the SNB would want is a return to a deflationary environment. And that is precisely what a strong currency would do, especially for a small open economy like Switzerland.

At this point, it's hard for the central bank to fight market flows. But surely policymakers will not be too happy with recent developments. And they will have to do something i.e. intervention at some point to try and mitigate the above risks.