In this week’s statement, the SNB could drop the view that ‘further tightening of monetary policy may become necessary to ensure price stability over the medium term’. This could help bond spreads to widen in favour of EUR/CHF.

A shift in the language on intervention (no longer selling FX) could also steer EUR/CHF away from the lows. Selling FX may no longer be considered worthwhile following the 2.8% depreciation of EUR/CHF from 0.97 to 0.94 since September. The central bank last lowered the near-term inflation forecast in September due to the economic slowdown and slightly lower inflationary pressure from abroad.

The return below 1.08 for EUR/USD is complicating matters for a (sustained) rally in EUR/CHF.

The dovish pricing of ECB policy, political acrimony over the budget in Germany and swing to the right of the political spectrum in northern Europe may not dim the appeal of the Swiss Franc in 2024.