EUR/CHF drops below 0.90, will the SNB set a new threshold?

EUR/CHF Under Pressure Amid Energy Crisis and Geopolitical Tensions

The situation remains challenging, especially as the euro faces significant headwinds due to soaring gas prices. Ongoing disruptions in the energy sector are intensifying, with Iran continuing to target vital energy infrastructure across Gulf countries. Most recently, Bahrain’s major oil refinery was reportedly hit by an Iranian drone attack.

Last week, the Swiss National Bank (SNB) appeared intent on maintaining the EUR/CHF exchange rate near the 0.90 threshold. This stance followed their public statements about being ready to intervene in the foreign exchange market. Shortly after, the currency pair briefly climbed above 0.91.

However, those efforts seem to have been overtaken by recent developments, as EUR/CHF has now dropped below 0.90. For some, this marks the lowest point since the dramatic decline in 2015, while for others, it represents a new all-time low as the Swiss franc strengthens further in response to ongoing geopolitical uncertainty.

EUR/CHF daily chart

With no historical reference for such downward moves, traders are now watching key psychological levels for potential support. The primary question is: At what point might the SNB decide to intervene again?

This is the critical factor to monitor, especially if the pair remains below the 0.90 mark throughout the day.

As Switzerland once again faces deflationary risks, a stronger franc could complicate the SNB’s efforts to counteract these pressures. This is a scenario the central bank has encountered many times before.

While the Covid-19 crisis provided temporary relief, the current environment may force the SNB to consider unconventional monetary measures once again—a step they are likely to delay as long as possible.