Euro Rebounds to 0.9420 as SNB Holds & German Data Beats

Key Moments

SNB Decision Weighs on the Swiss Franc

EUR/CHF gains 0.24% on Thursday and trades around 0.9415 at the time of writing, after reaching an intraday high of 0.9433 following the Swiss National Bank’s (SNB) monetary policy decision. The move reflects broad weakness in the Swiss Franc (CHF), while the Euro (EUR) also draws support from stronger German economic data.

The SNB leaves its key interest rate at 0%, matching market expectations. The central bank slightly upgrades its inflation projections, now looking for price growth of 0.7% this year and 0.8% in both 2027 and 2028. Even with these revisions, the SNB judges that medium-term inflation pressures have risen only modestly and anticipates inflation to pick up in the fourth quarter before easing over the course of 2027.

SNB Chair Martin Schlegel notes that the recent weakening of the Swiss Franc partly reflects widening interest rate gaps with other major currencies. He states that comparatively low interest rates in Switzerland reduce the currency’s appeal versus the Euro and the US Dollar (USD), while reaffirming that the central bank is prepared to step into the foreign exchange market if needed.

SNB Outlook and Domestic Growth Signals

Despite keeping policy steady, the SNB maintains a prudent view on the broader outlook. It identifies developments in the global economy as the key risk factor for Switzerland, citing tensions in the Middle East, uncertainty around trade policy, and movements in exchange rates.

SNB Governing Board member Petra Tschudin says Swiss Gross Domestic Product (GDP) growth was exceptionally strong in the second quarter, helped in part by solid performance in the chemicals and pharmaceutical sector. However, the central bank expects a more moderate growth pace over the coming quarters.

German IFO Data Provides Additional Tailwind for the Euro

On the Euro side, German releases on Thursday add further backing to EUR/CHF. Germany’s IFO Business Climate Index climbs to 89.9 in September from 88.8 in August, topping the market consensus of 89. The Current Assessment Index improves to 89.5 from 88.5, while the Expectations Index advances to 90.4, marking its highest level since February.

The combination of pressure on the Swiss Franc stemming from Switzerland’s low interest rates and better-than-expected German business sentiment allows EUR/CHF to preserve a constructive tone on Thursday.

Key Data and Projections Snapshot