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• EUR/CHF trades near one-month lows as geopolitical tensions lift safe-haven demand for the Swiss Franc.
• Swiss ZEW Expectations fall in December but fail to undermine the Franc’s strength.
• Steady SNB policy and a high bar for negative rates continue to support the Swiss Franc.

The Euro (EUR) remains under pressure against the Swiss Franc (CHF) on Tuesday, as rising geopolitical tensions drive flows into the safe-haven Franc. At the time of writing, EUR/CHF trades around 0.9287, hovering near its lowest level since November 21.

Renewed tensions between the United States (US) and Venezuela have added to broader risk aversion after US President Donald Trump imposed a blockade on sanctioned Oil tankers entering and leaving Venezuela. The escalation has weighed on market sentiment, helping the Swiss Franc outperform risk-sensitive currencies such as the Euro.

Beyond risk aversion, investors are also favouring the Swiss Franc over the Euro on relative macroeconomic fundamentals. The Eurozone economy continues to show signs of subdued and uneven growth, with weak manufacturing activity and cautious consumer sentiment weighing on the outlook.

On the data front, the Eurozone economic calendar remains light as markets drift toward the year-end holiday period. On the Swiss side, the ZEW Survey – Expectations for December fell to 6.2 from 12.2, pointing to a softer sentiment outlook. However, the weaker reading did little to dent the Swiss Franc’s strength.

On monetary policy, both the European Central Bank (ECB) and the Swiss National Bank (SNB) kept interest rates unchanged at their most recent meetings, though their forward guidance points to subtle differences in outlook. The ECB held its key rate at 2.00%, reiterating a meeting-by-meeting, data-dependent approach as inflation remains close to target and growth shows modest resilience. Markets broadly expect rates to remain steady through 2026, although some investors see the next policy move more likely to be a rate hike.

Meanwhile, the SNB left its policy rate at 0%, with most economists expecting it to maintain that stance through 2026 as inflation remains subdued and the medium-term outlook broadly unchanged. Policymakers have also signalled a high bar for a return to negative rates, noting that inflation is expected to edge higher over the coming quarters.

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