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The Swiss National Bank (SNB) is expected to keep interest rates unchanged at 0.0%. The focus will be on central bank’s signals about potential intervention in the currency market after EUR/CHF fell to 0.90 recently amid the US-Iran conflict.The central bank has repeatedly said that the bar for a return to negative interest rates is very high even though inflation in Switzerland has been hovering near 0% for months. SNB’s Chairman Schlegel even added that a few months of deflation would still not be enough for them to cut rates further. Higher energy prices will likely push headline inflation up in the next months although there’s also the risk of slowing economic activity, especially amid the Franc’s strength.In fact, the focus will likely be more on the Swiss Franc. The SNB has already hinted at an increased readiness to act, but tomorrow provides the first official platform to signal an action.The market is not pricing any change to interest rates this year, but it did raise the probabilities of a rate hike by year-end to 44%. That’s very unlikely to happen though as the SNB will focus more on downside risks to the economy and look through the energy price hikes.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The SNB’s decision to maintain interest rates at 0.0% is a clear signal of their cautious approach amid rising geopolitical tensions. With EUR/CHF recently dipping to 0.90, traders should be alert to potential interventions from the SNB aimed at stabilizing the franc. This situation is compounded by the US-Iran conflict, which could further impact currency flows and volatility. If the SNB hints at intervention, it could lead to a sharp reaction in the forex market, particularly for the euro and Swiss franc pairs. Keep an eye on the 0.90 level for EUR/CHF; a sustained break below could trigger increased volatility and prompt the SNB to act. Conversely, if the SNB reassures markets without intervention, we might see a rebound in EUR/CHF, making it a pivotal moment for day traders and swing traders alike. Watch for any comments from SNB officials in the coming days for clues on their next moves, as these could provide actionable insights for positioning in the forex market.
📮 Takeaway
Monitor the EUR/CHF level at 0.90 closely; any SNB intervention could lead to significant volatility in the forex market.
