EUR/CHF hits two-year low

• EUR/CHF slipped to the lowest level since July 2017. 
• Markets price in an expansive mood at the ECB. 

Dovish European Central Bank (ECB) expectations continue to bode well for the Swiss franc (CHF). 

The USD/CHF pair is currently trading at 1.0970, having hit a low of 1.0965 soon before press time. That was the lowest level since July 2017. 

The pair is down 190 pips from the high of 1.1155 observed on July 12. Further, it is down more than 4% from the high of 1.1476 seen on April 23. 

The sell-off could be associated with the increasingly expansive mood at the ECB. The central bank is widely expected to sound dovish later today, setting stage for a minor rate cut later this year, something the markets seem to have priced in over the last few weeks. 

The pair could slide if the ECB hits at a 25 basis point rate cut in the deposit rate of -0.40% in September.

That said, an aggressive easing by the ECB would ramp up pressure on the Swiss National Bank to dive further into the negative territory. 

As of Wednesday, the probability of SNB cutting rates by a quarter point by December stood at 72%. 

Pivot levels