Today’s inflation data for July is likely to play a decisive role in determining how clearly a continuation of the rate hike cycle will be priced out. The weaker inflation turns out to be, the more likely the market is to bet on a downward revision of inflation and thus unchanged interest rates for the time being, given the weaker economic environment.

If the Franc weakens too much in the wake of a reassessment of the Swiss interest rate outlook, actual or feared intervention by the SNB is likely to quickly put the brakes on the depreciation. 

While a sustainable return to the inflation target is uncertain – that means at least until September – EUR/CHF is, therefore, likely to struggle on its way up.