Swiss Franc: Mixed Outlook vs Euro on French Spread Moves - ING

EUR/CHF has entered a consolidation phase after a sharp decline driven by French debt concerns. ING analyst Chris Turner notes that worries over French spread movements have dampened expectations of ECB policy tightening, but the market is still pricing in further rate hikes. ING believes it is too early to remove ECB rate hike expectations for 2027.

**Consolidation Range and Pullback Risks**

ING points out that EUR/CHF could pull back to the 0.9230/0.9250 range. This assessment is based on the suppressive effect of French debt concerns on ECB policy expectations. Amid heightened risk-off sentiment, the Swiss franc, as a traditional safe-haven currency, gains support, putting downward pressure on EUR/CHF.

**Potential Recovery in Calmer Periods**

The bank also states that during calmer market periods, EUR/CHF could trade back in the 0.9350/0.9400 range. This implies the current consolidation is not a one-way trend, with the pair's direction depending on subsequent developments in French spreads and ECB policy expectations. ING holds a mixed outlook for EUR/CHF, neither ruling out further pullbacks nor excluding recovery during calmer phases.

**Policy Expectations Remain Key Variable**

ING emphasizes that the market is still pricing in further rate hikes, and the bank believes it is premature to remove ECB rate hike expectations for 2027. This assessment implies that if ECB policy expectations tighten again, EUR/CHF could find support; conversely, if French debt concerns persist and further weaken rate hike expectations, the pair could drift toward the lower end of the pullback range.