07.04.202614:12 Forex Analysis & Reviews: EUR/CHF: caught between low Swiss inflation and geopolitical risk

See also: InstaSpot trading indicators for EUR/CHF

After breaking the key strategic support level of 1.5250 at the end of 2008 (the 200-period moving average on the monthly chart), the EUR/CHF pair has been in a long-term bear market. Nevertheless, after touching a multi-year local low near 0.8980 in early March 2026, the pair managed a partial recovery, strengthening by roughly 2.3% to the current zone of key resistance levels 0.9222 (144-period moving average on the daily chart)–0.9252 (200-period moving average on the daily chart), which separates the medium-term bear market from a bull phase.

On the one hand, Switzerland faces record-low inflation, which allows the domestic regulator to maintain a dovish stance. On the other hand, growing geopolitical pressure and mixed signals from Europe keep the pair in equilibrium. Below we examine the factors that keep EUR/CHF balanced and what could catalyze the next move.

Switzerland: low inflation as pillar of stability

The key news for the franc was March inflation data. Year-on-year consumer prices (CPI) in Switzerland rose to 0.3%, the highest in a year. However, the national statistics office notes that this increase was driven mainly by higher prices for services and food, while the energy sector remained stable thanks to moderate movements in oil and gas prices.

The main takeaway for the market is that inflation remains well below the Swiss National Bank's target range of 2.0%. This frees the SNB to keep policy loose. The domestic situation does not call for rate hikes, and the SNB can maintain refinancing rates in the 1.00–1.25% range.

This combination — low inflation plus accommodative policy — creates a stable foundation for economic recovery and supports the export sector. Moreover, a low CPI cushion allows the SNB to act more actively against excessive franc appreciation, without fearing to stoke inflation.

Europe: mixed data and hawkish ECB tone

While Switzerland faces disinflationary risks, the European Central Bank is signaling the opposite.

1. Hawkish rhetoric. ECB Governing Council member Dimitar Radev said that talking about an April rate hike is still "too early," but his comment underscores that the option is actively debated. ECB President Christine Lagarde reiterated that policy will remain restrictive until inflation sustainably returns to the 2% target.

2. Weak German data. Germany's composite PMI fell to a three-month low of 51.9, driven by a sharp slowdown in services amid higher fuel prices and elevated uncertainty from the Middle East conflict. This is a classic stagflation signal that limits euro upside.

Trump's Middle East ultimatum and EUR/CHF prospects

Markets are now in wait-and-see mode, and macro data have taken a back seat. The main driver right now is geopolitics.

US President Donald Trump has given Iran an ultimatum to 20:00 Eastern Time on Tuesday, demanding the reopening of the Strait of Hormuz; otherwise, he threatened to destroy all bridges and power plants in Iran.

Iranian military officials have called these threats "nonsense," and a parliamentary adviser said Trump has about 20 hours to surrender to Iran, otherwise his allies will return to the Paleolithic era.

Given the current state of affairs, three possible paths for EUR/CHF stand out:

1. Escalation (bearish for EUR/CHF). If Trump carries out his threats, the dollar will surge, and global risk appetite will collapse. The Swiss franc, as a primary safe haven, would also strengthen sharply. The euro, conversely, would come under pressure because the region depends on energy imports.

Targets: a break of short-term support at 0.9194 (EMA200 on the 1-hour chart) and a move to the support zone 0.9158 (EMA50 on the daily chart)–0.9148 (EMA200 on the 4-hour chart).

2. Diplomatic solution (bullish for EUR/CHF). If the parties agree, or the deadline is postponed, tensions will ease. Investors would return to fundamentals. A hawkish ECB (possible rate increases) facing a dovish SNB (low inflation) would push the pair higher.

Targets: test resistance at 0.9250 and an attempt to secure above 0.9272 (EMA50 on the weekly chart)–0.9300.

3. Prolonged uncertainty (flat). If rhetoric persists without concrete action, the pair may remain range-bound between 0.9190 and 0.9250 until new inflation figures from Germany and eurozone retail sales are released later this week.

See also: EUR/CHF — scenarios of movement on 07.04.2026

Conclusion

EUR/CHF is trading by geopolitics rather than by economics. Investors are advised to monitor headlines from the Strait of Hormuz closely until Trump's ultimatum expires. A breakout of the current range is likely to be sharp and will most probably be driven by political, rather than economic, catalysts.