The firm argues that but for plausible intervention by the SNB yesterday, the Swiss franc would've recorded better gains in reaction to the US-Iran conflict thus far. The key line in the sand that they're highlighting is the obvious one at 0.90 for EUR/CHF. That is one that has become quite evident after the break of the 0.92 level just before the events in the Middle East.
A catch up to where we're finding ourselves with the franc currency:
- US-Iran tensions most untimely for the SNB
- We are more prepared to intervene in FX market in view of international situation - SNB
- Swiss franc tumbles after SNB warning earlier
The early reaction to the US-Iran conflict has been rather mixed I would say. The bond market is arguably the most curious one but we're not quite seeing all out fear and panic in markets as one would think. It might still be early days but it is always best to remember that market players tend to work through the echo chamber much quicker than they have in the past. That especially as the social media revolution has desensitised humanity and emotions to a large extent. However, let's leave that to a separate discourse.
Circling back to the franc, we saw EUR/CHF fall to a low of 0.9025 yesterday before bouncing back in European trading to above 0.9100. And that's where we are seeing price action settle now. Did the SNB step into the market to limit the franc's advance? Credit Agricole notes that:
"The CHF remains the safe haven of choice in G10 FX as the US-Iran conflict broke out. After already falling to decade lows just short of 0.9050 on Friday, EUR/CHF has extended its decline to around 0.9025 at this week’s open before reversing. This has triggered the largest spillover in CHF-implied volatilities since April 2025. The SNB is surely watching all that from up close, as the CHF would be at its strongest since 2011 on a real basis. While it is too early to know for sure whether the bank has had to intervene to rein in the CHF’s strength, preserving some big psychological level like 0.90 in EUR/CHF could carry extra signaling value for the SNB which has so far not particularly stepped up its jawboning against the CHF, perhaps to avoid any backlash from the US administration."
