2026-01-28 05:20:00
With all else that is happening in the major currencies space with regards to the US dollar and Japanese yen, the Swiss franc is quietly making waves since the start of the year. As the safe haven status of the dollar and yen both crumble, traders are finding safety and comfort in the franc amid the more tumultuous and volatile landscape.
For the last two years, the SNB seems to be drawing a line for EUR/CHF at 0.9200. That’s a signal in which they are letting markets know that they have a certain pain threshold and trigger point for potential intervention.
However, the latest drop this week starts to challenge that and it seems like that particular pain threshold might be shifting. That especially since the allure for the dollar and yen have weakened significantly, making the franc very much desirable.
EUR/CHF weekly chart
If the lines have truly shifted, it is something worth taking note. And not just with regards to the Swiss currency and SNB policy setting.
Sure, allowing the franc to strengthen further means risking deflationary pressures and that means we could see the Swiss central bank dip back into more unconventional monetary policy sooner rather than later.
However, further strength in the franc also acts as an indirect tailwind for the euro currency especially. That amid a broader dollar retreat as well. But with the SNB not putting as tight a leash on the franc as before, it does free up the opportunity for the euro to also take advantage against the dollar; outside of what is happening with EUR/CHF that is.
In other words, the chart above should be taken as a signal from the SNB more than anything else. As a reminder, the euro can still fall against the franc but also strengthen against the dollar especially when the conditions are lining up as they are now in the macro environment.
