EUR/CHF slides as Euro struggles post-inflation data

• EUR/CHF weakens for a second straight session as the euro struggles to recover post-Eurozone inflation data.
• Eurozone core inflation steady at 2.3%, headline CPI eases to 2.0% in August.
• SNB maintains a flexible policy outlook ahead of its September 25 decision, with no immediate need for easing.

The Euro (EUR) trades under pressure against the Swiss Franc (CHF) on Wednesday, with EUR/CHF extending losses for the second straight session as the common currency struggles to gain traction following Eurozone inflation data. At the time of writing, the cross is trading around 0.9320 during the American session.

The latest inflation data from Eurostat showed that Eurozone price growth remained broadly stable in August, reinforcing the European Central Bank’s (ECB) cautious stance on monetary policy.

The Core Harmonized Index of Consumer Prices (HICP), which excludes volatile items such as food and energy, rose 2.3% YoY, in line with both forecasts and the previous month’s reading. On a monthly basis, core inflation increased by 0.3%, unchanged from July, highlighting persistent underlying price pressures in the bloc.

Meanwhile, headline inflation eased to 2.0% YoY in August, down from 2.1% in July and slightly below expectations. On a monthly basis, prices rose just 0.1%, missing forecasts for a 0.2% increase and decelerating from July’s 0.2% rise.

The inflation release follows last week’s ECB policy decision, where the central bank kept all three key interest rates unchanged and signaled that policy is likely at its terminal level. While officials acknowledged progress in bringing inflation down, they reiterated a cautious, data-dependent approach going forward, emphasizing the need to maintain restrictive conditions for an extended period to ensure price stability.

On the Swiss side, disinflation appears to be deepening. The Producer and Import Price Index dropped 0.6% in August, marking a sharp 1.8% annual decline. Broader inflation remains comfortably within the Swiss National Bank’s (SNB) 0-2% target range, reducing the urgency for further easing.

While Chairman Martin Schlegel recently downplayed the need for negative rates, he acknowledged that the SNB remains flexible in response to evolving data. The next monetary policy decision is scheduled for September 25, where updated inflation projections and growth risks will help shape the path forward.