USD/CHF to remain in its four-week range of 0.8400-0.8550 – DBS

USD/CHF may not break the four-week range of 0.8400-0.8550, even if the SNB sees a strong CHF as reducing imported inflation and hurting Swiss exporters amid weak demand in Europe, notes FX analyst at DBS Philip Wee.

The SNB needs a weaker CHF

“On September 26, the Swiss National Bank is expected to cut interest rates for the third time by 25 bps to 1%.

“Last week, the Swiss State Secretariat for Economic Affairs (SECO) estimated that CPI inflation would fall to 0.7% in 2025 from 1.2% in 2024, consistent with the SNB’s view that a strong CHF is reducing inflation imported and hurt Swiss exporters amid weak demand from Europe.”

“However, USD/CHF may not break above the four-week range of 0.8400-0.8550. CFTC data suggested that its decline was driven by a withdrawal of CHF short positions, reflecting aggressive Fed tapering expectations.”