EUR/CHF traded near 0.9230 on Thursday, little changed on the day. It rebounded from an intraday low of 0.9215 after revised Eurozone inflation data for March.
Eurozone HICP rose 1.3% month on month in March, up from 0.6% in February and above the 1.2% initial estimate. Annual HICP was revised to 2.6%, up from 1.9% and the highest since July 2024.
Eurozone Inflation Revision
Core inflation, which excludes energy, food, alcohol and tobacco, eased to 2.3% year on year from 2.4% in February. The ECB’s March 19 meeting accounts are due later on Thursday, ahead of its next policy meeting on 29–30 April.
Markets still price in two 25-basis-point rate rises this year. Reuters reported that the chance of a move in April is limited, while a June rise is almost fully priced in.
In Switzerland, SNB minutes cited more uncertainty linked to the war in the Middle East. The SNB expects GDP growth of around 1% in 2026 and about 1.5% in 2027.
The SNB said a stronger Swiss Franc has tightened conditions, and inflation may rise temporarily due to energy before easing. The minutes prompted no immediate Swiss Franc reaction.
Policy Outlook Divergence
Given the widening gap between central bank outlooks, we see a clear opportunity for the Euro to strengthen against the Swiss Franc. The European Central Bank is facing mounting pressure from rising inflation, while the Swiss National Bank remains cautious due to an uncertain economic outlook. This fundamental divergence suggests that the path of least resistance for EUR/CHF in the coming weeks is upward.
The revised Eurozone inflation figure of 2.6% is the highest since July 2024 and is a key factor driving this view. This increase is largely fueled by energy costs, with Brent crude oil prices having recently climbed above $95 per barrel, a level not seen since late 2025. Since the core inflation rate actually softened, it gives the ECB a clear target, making a hawkish policy shift more likely.
On the other side, the SNB’s concerns about a subdued economy are supported by recent data showing a contraction in Switzerland’s manufacturing sector. The latest Purchasing Managers’ Index (PMI) registered 48.5, marking the second consecutive month of decline and underscoring the central bank’s hesitant stance. This makes any SNB intervention to strengthen the franc highly improbable in the near term.
This situation creates a compelling case for using options to position for a rise in EUR/CHF leading into the ECB meeting on April 29-30. Buying call options with expiry dates in May or June would allow traders to benefit from a potential price increase driven by hawkish ECB commentary. This strategy offers a defined risk, limited to the premium paid for the option.
We are observing that the market is already beginning to price in this divergence, which is a notable shift from the lower volatility environment we experienced for much of 2025. One-month implied volatility for EUR/CHF is now hovering around 7.5%, up significantly from last year’s average of 5.8%. This suggests that positioning now could be advantageous before volatility potentially increases further around the central bank meeting.
