Swiss Franc turns sharply bearish after SNB Chief’s warning

The Swiss Franc is experiencing one of its worst weeks in over one year, with concerns mounting that the strength of the Swiss Franc could hamper policy transfer.

The Swiss National Bank Chairman Thomas Jordan warned that an appreciating Franc could harm the Swiss economy, sending inflation rapidly lower.

The SNB is now concerned that a rising Franc could bleed over into a disinflationary scenario, making it more difficult for the SNB to manage.

The Franc has already been on-target for inflation with the national inflation rate at 1.7%, below the SNB’s upper bound target of 2.0%. However, the Swiss Franc has sharply depreciated through 2024, declining 3.2% against the dollar, 2.8% against the Sterling, and 1.6% against the Euro.

USD/CHF has gained 4.3% since December’s lows near 0.8333 and is on track to return to the 0.8800 handle. However, the 200-day Simple Moving Average is declining into 0.8850, a key technical barrier between current bids and the 0.9000 handle the pair lost in November. EUR/CHF has seen limited recovery from December’s all-time lows at 0.9254, climbing around 2% from the absolute bottom.