UBS Sees Franc Losing Ground to Euro and Dollar by 2026

Key Moments

UBS Currency Targets for 2026

UBS expects the Swiss franc to weaken modestly against both the euro and the U.S. dollar into 2026. The bank projects the EUR/CHF exchange rate will move up to 0.94, while USD/CHF is expected to hold around 0.78.

Impact of ECB and SNB Policy Stances

According to UBS, the European Central Bank’s recent decision to keep interest rates on hold for an extended period is a crucial pillar of its view on the Swiss franc. The bank describes this stance as “music to the Swiss National Bank’s ears,” referencing the SNB’s recent emphasis on the importance of interest rate differentials during its latest press conference.

The ECB’s slight upgrade to its Eurozone growth outlook is seen by UBS as reinforcing expectations that the interest rate gap between the Eurozone and Switzerland will remain wide. The bank notes that such differentials typically play a significant role in shaping movements between the Swiss franc and the euro.

Geopolitical Risks and Safe-Haven Dynamics

UBS also flags geopolitical developments as a factor in its Swiss franc outlook. The bank points to ongoing conversations surrounding a potential Ukraine-Russia peace agreement as a possible downside risk for the franc, which has historically tended to strengthen when global uncertainty is elevated.

Shift Toward Regional Drivers in 2026

Looking ahead, UBS anticipates a transition in the drivers of currency markets. After a period that it characterizes as being dominated by global financial conditions, the bank expects regional macroeconomic dynamics to reclaim greater importance in 2026 as worldwide uncertainty gradually recedes.