There are a  number of reasons for CHF to underperform EUR over the medium-term, these being – (1) a wider EUR-CHF short rate differential in favor of EUR that may last well into 2024 as ECB likely lags most, including SNB, in any rate cut cycle; and (2) the ECB likely accelerating the pace of its balance sheet contraction relative to most other major central banks, including the SNB.

While the rates outlook likely favors EUR, the catalyst for a sustained decline in CHF against EUR would need a pickup in Euro area’s recovery that in turn looks towards a strengthening Chinese recovery. In this regard, stimulus policy measures by China following its Politburo meeting in July will be keenly watched. 

It is entirely possible that CHF may have hit its lows vs. EUR at 0.9523 on July 27th and could find the 0.9500 level to be a solid barrier towards preventing further gains in CHF.