Summary:
Friday saw European currencies rise, led by hawkish policymakers. The Swiss franc gained 5% against the euro this year, hitting a peak since Jan 2015.
European currencies largely edged higher on Friday due to more hawkish policymakers. Among them the Swiss franc has gained nearly 5% against the euro this year and las week touched its highest since Jan 2015.
The ECB pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.
Christine Lagarde said that inflation would soon rebound and price pressures remain strong. Also the central bank was planning to phase out its bond-buying scheme.
She suggested that rate cuts could be unlikely until the second quarter, saying the first half of 2024 would be particularly rich in data for more clues on inflation path.
The ECB revised its projections for growth and inflation lower, pointing to the end of tightening cycle. Elsewhere the SNB also lowered its inflation forecasts and kept rates on hold.
Chairman Thomas Jordan sought to dampen expectations of cuts by highlighting continued economic uncertainties, but economists saw the announcement as a dovish shift.
EUR/CHF looks bullish having formed a double-bottom pattern in daily chart. The 50 SMA is the first resistance needed to break through and the psychological 1.00 mark could be the key to reverse the long-term downtrend.
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