The Swiss National Bank (SNB) decided yesterday to cut interest rates by 25 basis points, as expected, from 0.25% to 0.0%, marking the sixth consecutive cut. This makes the SNB the first central bank in the world to currently adopt a zero-interest rate policy. The question now arises: will the SNB return to a negative interest rate policy in the near future?
The SNB continues to pursue an accommodative monetary policy to support the Swiss economy, which is experiencing deflationary pressures. The Consumer Price Index (CPI) on an annual basis declined by 0.1% in May, lower than April’s reading of 0.0%, reaching its lowest level since March 2021. Similarly, the Producer Price Index (PPI) on an annual basis recorded a deflation of 0.7%, lower than the previous reading of -0.5%.
Meanwhile, the USD/CHF currency pair has seen a notable decline recently, reaching 0.8038 on April 21, 2025 — its lowest level in 14 years — and is currently trading near 0.8200. The pair has dropped around 10% year-to-date.
The strength of the Swiss franc versus the US dollar is largely attributed to its traditional role as a safe haven during periods of turmoil, particularly amid the recent trade tensions between the US and China. Despite an initial agreement between the two countries, uncertainty still clouds the outlook. Additionally, escalating geopolitical tensions between Israel and Iran, along with fears that the US and other nations may become involved in the conflict, are adding to the downward pressure on the USD/CHF pair. This comes as the US dollar index is also hovering at its lowest levels in three years.
Technical Indicators:
- Relative Strength Index (RSI): Currently at 43, indicating continued bearish momentum for the USD/CHF pair.
Support and Resistance Levels:
- Support levels: If the pivot point of 0.8182 is broken, the pair may target 0.8163, 0.8133, and 0.8114.
• Resistance levels: If the pivot point is breached to the upside, the pair may target 0.8212, 0.8231, and 0.8261.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
