I added a 'ps.' to this down below. I guess this bit is the pre-ps.!
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UBS is forecasting a rally for the euro against the Swiss franc, projecting the EUR/CHF exchange rate will climb to 0.94. This bullish outlook is built on the conviction that the Swiss National Bank (SNB) has a high probability of intervening in the market to weaken its "overly strong" currency.
The bank's analysis states that the franc's recent strength is not based on Swiss economic fundamentals, but rather on its "safe-haven" status, which has been inflated by global political uncertainties and trade tensions. This has pushed the franc to a level that is now a direct threat to the SNB's mandate.
According to UBS, the SNB's primary concern is that an overly strong franc creates two major economic problems: it exerts deflationary pressure by making imports cheaper, and it severely damages the competitiveness of Switzerland's vital export industry.
Because this currency strength is seen as "temporary safe haven-driven" and not justified, UBS believes the SNB is highly likely to step in. This intervention would involve the SNB actively selling Swiss francs and buying euros, effectively creating a "soft floor" under the EUR/CHF exchange rate and preventing the franc from strengthening further.
Beyond the SNB's actions, UBS sees the underlying market risks as firmly "skewed to the upside" for the EUR/CHF pair.
This view is based on two key pillars. First, the bank expects the temporary safe-haven demand to fade as global political and trade uncertainties are resolved. Second, a clear interest rate differential favors the euro. With the SNB's policy rate at 0%, the franc offers no yield, while the euro offers a higher return. This makes the euro the more attractive currency to hold for "total return," putting natural, long-term upward pressure on the pair.
Combining these factors, UBS has established its 0.94 forecast. The bank sees the SNB's intervention as the catalyst that will defend the currency in the short term, while the unwinding of safe-haven flows and the attractive interest rate differential will be the long-term drivers that pull the EUR/CHF pair up to its target level between the fourth quarter of 2025 and the third quarter of 2026.
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This analysis from UBS is likely to create a psychological floor for the EUR/CHF pair, as traders become wary of likely SNB intervention.
It could encourage long-term investors to start buying euros at current levels, viewing the franc's strength as temporary and positioning for the anticipated reversal to 0.94.
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As a ps., I should add in the SNB minutes released Thursday didn't carry too much of a hint on this:
SNB Minutes: Inflation is not expected to become persistently negative
