EUR/CHF is coming under strong selling pressure this week, moving below 0.97 and thus testing the support area prevailing since last October. 

The pair has disconnected from EUR/USD and its own interest differential and, since the start of the year, the best driver explaining CHF appreciation is the contraction in Swiss banks’ sight deposits. The total level of sight deposits at the SNB can only be changed through monetary policy operations or through exchange against cash, and FX reserves diminished again in June. 

As long as the SNB has to sell foreign assets, the Franc is likely to feel bullish pressure.