Rabobank’s Senior FX Strategist Jane Foley highlights that the Swiss Franc (CHF) has underperformed typical safe-haven expectations since the onset of the Middle East conflict, ranking only as the seventh best performing G10 currency from February 27, just before the conflict began, and maintaining this position over the past week and on a 1-day view [1]. This performance is attributed to the Swiss National Bank’s (SNB) increased warnings about foreign exchange intervention at the start of the conflict, which has influenced market reactions [1].
The EUR/CHF currency pair briefly traded below the key 0.90 level during the morning’s Asian session, marking a short dip below this threshold. A similar move occurred on March 9, when EUR/CHF reached its lowest level since January 15, 2015—the date when the SNB unexpectedly ceased protecting the 1.20 level, resulting in a historic surge in CHF’s value [1]. Although the SNB no longer explicitly targets a specific exchange rate, market speculation suggests that the 0.90 level could serve as a 'line in the sand' for the SNB [1].
Foley notes that the SNB’s upcoming policy meeting on March 19 will be closely watched for any indications of increased intervention rhetoric. The European Central Bank (ECB) policy announcement on the same day is also significant, as a positive response by the euro to ECB guidance could alleviate some pressure on the EUR/CHF exchange rate [1]. Rabobank maintains the view that EUR/CHF will remain close to the 0.90 level over a 1-to-3-month horizon, though an extended or widened crisis in the Middle East could heighten the risk of a sustained move below 0.90 [1].
CONCLUSION
The Swiss Franc’s muted safe-haven performance and the EUR/CHF’s proximity to the 0.90 level reflect ongoing market uncertainty driven by SNB intervention warnings and geopolitical tensions. Upcoming SNB and ECB policy decisions on March 19 are expected to be pivotal for the currency pair’s direction. While Rabobank anticipates stability near 0.90, further escalation in the Middle East could increase downside risks.