EUR/CHF falls as ECB hints at end of rate hike cycle

• EUR/CHF is down 0.52% to 0.9538 after the ECB rate hike, but signals it could be the last hike of the current cycle.
• The president of the ECB, Christine Lagarde, foresees moderate economic growth and a fall in inflation, which tilts the risks to the downside.
• Swiss producer and import prices cool, setting the stage for the SNB to hold rates steady at its September 21 meeting.

He Euro (EUR) sank in front of Swiss franc (CHF) on Thursday, after the European Central Bank (ECB) decided to raise rates, but noting that it “could” be the last rate hike. Thus, the EUR/CHF it plunged from its daily high of 0.9598 to 0.9538, losing 0.52%.

ECB rate hike and dovish outlook push EUR/CHF down, while SNB bets on stable rates

On Thursday, the European Central Bank (ECB) decided to raise rates by 25 basis points for the tenth time since it began its tightening cycle, although it hinted that it could be the last hike, despite leaving the door open for additional tightening. The statement added that rates should be maintained at higher levels and growth forecasts were revised downwards.

Following the publication of the ECB statement, its president, Christine Lagarde, stated that economic growth would remain moderate and that the third quarter would be weak. She added that inflation would come down in the coming months and stressed that the risks to growth are on the downside. Ms. Lagarde added that some inflation indicators remain elevated, and she did not say that rates in the Eurozone (EU) had peaked.

Following the ECB’s decision, the EUR/CHF pair plummeted from daily highs near 0.9600 towards 0.9550, while the 10-year German bund fell three basis points to 2.599%.

Previously, producer and import prices in Switzerland cooled, opening the door for the Swiss National Bank (SNB) to keep rates unchanged at the monetary policy meeting on September 21.

Given the fundamental backdrop suggesting that the ECB is done raising rates, along with the SNB set to raise rates at the next monetary policy meeting, it means that EUR/CHF could extend its losses in the near term.

EUR/CHF Price Analysis: Technical Outlook

On the daily chart, the pair pulled back after testing the 50-day moving average (DMA) at 0.9592, and fell to a four-day low at 0.9534 before stabilizing at current exchange rates. However, the EUR/CHF pair is timid about extending its losses as it needs to break below the August 23 swing low at 0.9515 which, once broken, the pair could fall towards the 26 August low. September at 0.9403.