The Swiss Franc (CHF) experienced broad-based weakness on Thursday after the Swiss National Bank (SNB) decided to leave its policy rate unchanged at 0% [1]. This decision diverges from the actions of other major central banks, which have raised borrowing costs in response to inflation pressures, particularly those linked to higher oil prices [1]. As a result, USD/CHF climbed to its highest level since May 2025, trading around 0.8275 and up 0.27% on the day [1]. Analysts at Brown Brothers Harriman noted that the SNB 'pushed back against market pricing 50 to 75bps of hikes in the next twelve months,' signaling little appetite for tightening and reinforcing the view that the widening yield gap between the US, EU, and Switzerland will keep upward pressure on USD/CHF and EUR/CHF [1].
The SNB maintained that its monetary policy is appropriate to keep inflation within its price stability mandate of less than 2% per annum, even though its inflation projection was raised slightly due to higher oil prices. However, the projection remains below 1% over the entire forecast horizon, supporting the case for policy inertia [1]. Technical analysis shows USD/CHF extending above key moving averages, with the Relative Strength Index (RSI) near 68, close to overbought territory, and the MACD in positive territory, indicating continued upside momentum [1]. Immediate resistance is at 0.8350, with support levels at 0.8200, 0.8122, 0.8045, and 0.7947 [1].
In related currency moves, the Japanese Yen (JPY) was noted as the strongest against the Swiss Franc in daily percentage change tables, despite its overall weakness against other majors [2]. The Yen's weakness has been attributed to the wide interest-rate gap, as the Bank of Japan (BoJ) raised its policy rate by 25 basis points to 1.25% at its September meeting, but the move was seen as slightly dovish due to dissent within the BoJ and ongoing inflationary pressures from elevated oil prices [2]. The British Pound (GBP) also benefited from the Yen's weakness, with GBP/JPY rebounding to around 210 [2].
Market participants are closely monitoring the risk of intervention by Japanese authorities as USD/JPY approaches the 160.00 level [2]. Meanwhile, the Bank of England (BoE) has kept its benchmark rate unchanged at 3.75% for six consecutive meetings, maintaining a 2.50% rate gap with Japan, which continues to support GBP/JPY [2]. BoE officials expressed mixed views on future policy, with some highlighting the need for further tightening if energy prices remain elevated [2].
CONCLUSION
The SNB's decision to keep rates at 0% and push back against market expectations for hikes has weakened the Swiss Franc, propelling USD/CHF to multi-month highs. The widening yield gap between Switzerland and other major economies is expected to maintain upward pressure on the pair. Market sentiment remains moderately positive for USD/CHF, with technical indicators supporting further gains unless resistance levels are breached.