EUR/CHF steadies above 0.9350 amid soft Eurozone, Swiss inflation data

• EUR/CHF trades near 0.9350, with the Euro under modest pressure as traders digest soft Eurozone employment data.
• Eurozone Unemployment Rate climbs to 6.3% in August, above expectations.
• Swiss CPI falls 0.2% MoM in September, with annual inflation easing to 0.2% and missing the 0.3% forecast.

The Euro (EUR) treads water against the Swiss Franc (CHF) on Thursday, with EUR/CHF trading around 0.9358 during the American session. The cross continues to face technical resistance from the 100-day Simple Moving Average (SMA) around 0.9357, which has capped upside attempts since early September.

Eurostat reported that the Eurozone Unemployment Rate rose to 6.3% in August, surprising to the upside after holding at 6.2% in both of the previous two months. The uptick suggests the bloc’s labor market may be showing early signs of cooling after months of resilience, potentially adding to concerns about sluggish growth momentum in the second half of the year.

Meanwhile, European Central Bank (ECB) policymaker Martins Kazaks noted on Thursday that uncertainty in the outlook “remains very high.” He added that current interest rate levels are “very appropriate” and could stay unchanged if no further shocks emerge.

In Switzerland, the Federal Statistical Office reported that consumer prices fell by 0.2% in September, in line with forecasts but deeper than the 0.1% decline recorded in the prior month. On an annual basis, inflation slowed to 0.2%, undershooting expectations of 0.3% and unchanged from August’s 0.2%. Core inflation also eased to 0.7% year-on-year. The breakdown showed lower prices for hotels, supplementary accommodation, international package holidays, and air transport, while clothing, berries and household furniture posted modest gains.

The figures highlight Switzerland’s persistently subdued inflation backdrop, leaving the Swiss National Bank (SNB) with limited room for policy maneuver as imported goods prices continue to contract and domestic pressure remains soft.

According to BHH, the swaps market continues to price nearly a 40% chance of a 25 bps rate cut to -0.25% within the next 12 months. SNB President Martin Schlegel reiterated last week that the central bank stands ready to ease further if needed. That said, any resolution of Switzerland’s trade dispute with the US would reduce the pressure on the SNB to return to a negative policy rate and bodes well for the Swiss Franc.