The EUR/CHF currency pair rebounded from its intraday low of 0.9198 to trade around 0.9230 on Thursday, following the release of revised Eurozone inflation data for March [1]. The Harmonized Index of Consumer Prices (HICP) in the Eurozone increased by 1.3% month-on-month, up from 0.6% in February and slightly above the preliminary estimate of 1.2%. On an annual basis, headline inflation was revised higher to 2.6%, the highest since July 2024, compared to 1.9% previously. However, core inflation, which excludes volatile items such as energy and food, was revised down to 2.3% year-on-year, below both the preliminary estimate and February’s reading of 2.4% [1].
The divergence between rising headline inflation and a lower core reading suggests that energy prices are exerting upward pressure on overall price dynamics in the Eurozone. This development could prompt the European Central Bank (ECB) to consider a more hawkish stance at its upcoming monetary policy meeting scheduled for April 29-30. The minutes from the ECB’s March 19 meeting, due later on Thursday, are expected to provide further insight into policymakers’ views on inflation persistence [1].
ECB President Christine Lagarde emphasized the need for the central bank to remain “completely agile” on interest rates, clarifying that there is no bias toward tightening. Despite this, financial markets are pricing in two 25-basis-point rate hikes for 2024, with a move by June now almost fully anticipated by investors. However, ECB policymaker François Villeroy de Galhau cautioned that it is premature to focus on a rate hike at the April meeting, stressing the need for more data and reiterating that there is no predetermined path for interest rates [1].
On the Swiss side, the Swiss National Bank (SNB) released meeting minutes indicating increased economic uncertainty due to the war in the Middle East. The SNB projects Swiss GDP growth of around 1% in 2026 and about 1.5% in 2027, but warns that near-term activity could remain subdued. The SNB also noted that the recent appreciation of the Swiss Franc has tightened monetary conditions. Swiss inflation is expected to rise temporarily due to higher energy prices before declining again in the medium term, remaining consistent with price stability. The SNB considers its current monetary policy stance appropriate despite the uncertain outlook [1].
CONCLUSION
The rebound in EUR/CHF reflects market reactions to stronger-than-expected Eurozone inflation data and cautious central bank guidance. While markets anticipate ECB rate hikes later in the year, both the ECB and SNB are signaling a cautious approach amid ongoing economic uncertainties. Investors are closely watching upcoming policy meetings and data releases for further direction.