Bank of America Predicts EUR/CHF to Plummet as Swiss National Bank's Adjustment Phase Nears End

The global research team at Bank of America has made a significant prediction regarding the euro to Swiss franc exchange rate, forecasting that EUR/CHF will continue to decline after the end of what the Swiss National Bank (SNB) refers to as the "critical adjustment phase." This news was released on March 15, 2025, from Zurich and London, and has important implications for the European currency market, international trade flows, and the coordination of monetary policy between the Eurozone and Switzerland.

EUR/CHF Exchange Rate Forecast: Bank of America Analysis

The foreign exchange research team at Bank of America, led by G10 FX strategy head Athanasios Vamvakidis, has published a detailed report outlining their bearish outlook on the euro against the Swiss franc. The analysis indicates that the end of the SNB's "adjustment phase" will be a major catalyst for anticipated exchange rate movements. This phase refers to the period during which the SNB has begun to gradually normalize its monetary policy after years of unconventional measures.

Furthermore, the bank's technical analysis suggests that EUR/CHF may test several key support levels in the coming quarters. Historical data shows that this currency pair has been trading within a relatively narrow range since 2022, but changes in the fundamentals indicate that this stability may be disrupted. Market participants should note that the Swiss franc is typically viewed as a safe-haven currency during periods of economic uncertainty in Europe.

Evolution of the Swiss National Bank's Monetary Policy

During the 2008 financial crisis and the Eurozone debt crisis, the Swiss National Bank implemented unconventional measures to prevent the franc from appreciating excessively. These interventions included negative interest rates and substantial currency purchases. However, since 2022, the central bank has begun systematically reducing these positions. Currently, SNB Chairman Thomas Jordan emphasizes a return to conventional monetary policy tools.

A recent SNB statement highlighted its commitment to price stability while acknowledging that the need for interventions to weaken the franc has diminished. According to official data, the bank's foreign exchange reserves have decreased by approximately 15% from their peak. This reduction indicates confidence in the resilience of the Swiss economy and its inflation outlook. Meanwhile, the European Central Bank faces different challenges, with inflation remaining persistently high across several Eurozone economies.

Comparing Monetary Policies: Divergence Between ECB and SNB

The divergence in monetary policy between the European Central Bank and the Swiss National Bank places fundamental pressure on the EUR/CHF exchange rate. Although both institutions have similar inflation target mandates, the economic contexts are vastly different. Switzerland's inflation rate remains close to the SNB's target range of 0-2%, while inflation in the Eurozone has exceeded the target for several consecutive years.

This divergence suggests potential exchange rate volatility in the future.