USD/CHF may not break above its four-week range of 0.8400-0.8550, even if SNB thinks a strong CHF was curbing imported inflation and hurting Swiss exporters amid weak demand from Europe, DBS’s FX analyst Philip Wee notes.

SNB needs a weaker CHF

“On September 26, the Swiss National Bank should lower rates a third time by 25 bps to 1%.”

“Last week, the Swiss State Secretariat (SECO) for Economic Affairs forecast CPI inflation decelerating to 0.7% in 2025 from 1.2% in 2024, aligning with the SNB’s view that a strong CHF was curbing imported inflation and hurting Swiss exporters amid weak demand from Europe.”

“However, USD/CHF may not break above its four-week range of 0.8400-0.8550. CFTC data suggested that its fall has been driven by an unwinding of short CHF positions, reflecting aggressive Fed cut expectations.”