Commerzbank FX analyst Michael Pfister forecasts that the Swiss Franc (CHF) will remain under pressure throughout 2026, as market participants gradually reduce their expectations for a Swiss National Bank (SNB) rate hike. This outlook is driven by subdued Swiss inflation, the SNB's limited capacity for intervention, and a widening interest rate differential with the European Central Bank (ECB) [1].
Pfister notes that, despite recent reports suggesting the SNB might keep interest rates unchanged until the end of 2027, markets are still pricing in the first rate hike by mid-2027. He argues that this expectation is unlikely to materialize given the current inflationary environment in Switzerland, which is expected to remain subdued in the coming months [1].
Commerzbank anticipates that the ECB could raise its key rate for a second time in September, which would further widen the rate differential and exert additional downward pressure on the franc. As a result, the Swiss franc is likely to continue facing difficulties until the end of 2026, before recovering in 2027. The bank expects EUR/CHF to stabilize at 0.94 by the end of the third quarter [1].
Looking ahead, Commerzbank believes that once market expectations for SNB rate hikes are fully priced out, the franc will begin to appreciate again. The SNB's options for weakening the franc are limited, as it is not willing to intervene more aggressively and its ability to cut interest rates is constrained [1].
CONCLUSION
Commerzbank projects continued weakness for the Swiss franc through 2026, driven by subdued inflation and widening rate differentials with the ECB. However, a recovery is expected in 2027 as market expectations adjust and the SNB's limited intervention capacity becomes apparent. The bank forecasts EUR/CHF to stabilize at 0.94 by the end of Q3.