EUR/CHF is pushed up by central banks

Note: This section contains information in English only.
Source: Dukascopy Bank SA


In late February, the Euro has dropped against the Swiss Franc various fundamental aspects. However, the reaching of low levels not seen since 2015 was followed by a recovery, which is clearly fueled by the policy of the European Central Bank and the Swiss National Bank.

First of all the European Central Bank has been keeping its monetary stimulus programs intact, increasing the supply of the Euro and decreasing its value despite ongoing inflation. Secondly, a run to safety occurred at the end of February, as Russia invaded Ukraine. Namely, the value of the Swiss Franc surged due to inflows, and the Euro dropped due to European stocks being sold off on expectations of lower profits due to European companies leaving the Russian market. The drop stopped, as the rate pierced the 1.0000 mark.

The drop ended due to the Swiss National Bank getting involved. Prior to the reversal on March 5, on March 2, the Swiss National Bank announced that it would remain capable in getting involved into the Forex markets to keep the CHF down. On March 7, the bank revealed that it would stop the rise of the Franc.

Note that the SNB has been working to beat down the value of the national currency since the 2015 unpegging of the CHF from the Euro. After the unpegging, the EUR/CHF dropped to 1.0235, which is a lot higher than the March 5 low at 0.9975.

In addition, the ECB stated on March 10, that the central bank might stop its monetary stimulus programs in the third quarter of 2022. Despite this reveal stating that Euro creation schemes are set to continue for almost half-year, the markets revalued the future value of the Euro to the upside. Namely, the dilution of the value of the common European currency should occur at a lower than expected amount.

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