EUR/CHF steadies as traders weigh French political risks and weak Swiss producer prices

• EUR/CHF steadies as traders weigh French political risks and soft Swiss inflation data.
• Euro sentiment remains fragile, with France’s budget standoff and risk of a no-confidence vote keeping investors cautious.
• ING analysts expect the Franc to remain strong in the near term, warning that US tariffs could hit Swiss growth by up to 1.7%.

The Euro (EUR) remains under pressure against the Swiss Franc (CHF) on Tuesday, as ongoing political turmoil in France continues to weigh on sentiment toward the common currency. At the time of writing, the cross is trading around 0.9295, attempting a modest recovery after slipping to 0.9282 earlier in the day.

The mild rebound comes as the Swiss Franc weakened following softer-than-expected inflation data. Figures from the Swiss Federal Statistical Office showed that Producer and Import Prices fell 0.2% MoM in September, missing expectations of a 0.2% increase and extending August’s 0.6% decline.

On an annual basis, prices dropped 1.8%, matching the previous month’s pace and marking the 29th consecutive month of producer deflation, highlighting persistent disinflationary pressures within the Swiss economy.

Recent inflation data released earlier this month also confirmed that consumer prices remain well within the SNB’s comfort zone, suggesting little urgency for policy tightening. The swaps market continues to imply around 40% odds of a 25-basis-point rate cut to -0.25% over the next year. SNB President Martin Schlegel recently said the central bank is prepared to cut rates further if needed.

According to ING analysts, the Swiss Franc is likely to remain strong in the near term, even as US tariffs pose a serious challenge for Switzerland’s export-driven economy. They estimate that the new tariffs could reduce Swiss GDP growth by 0.85% to 1.7%, though the SNB’s ability to counter franc strength is limited due to constraints on foreign-exchange interventions and reluctance to push rates further into negative territory.

ING expects the Euro to stay near current levels around 0.9300 francs over the next three months, before gradually rising toward 0.9600 in the next 12 months, adding that a decisive EUR recovery is unlikely until Eurozone growth improves in 2026.

Meanwhile, political developments in France continue to cast a shadow over the Euro. Prime Minister Sébastien Lecornu faces a confidence test as he prepares to present the 2026 budget bill, while opposition parties threaten to table a no-confidence motion if fiscal targets are missed. The heightened uncertainty has dampened investor appetite for Eurozone assets and supported the Swiss Franc’s traditional safe-haven appeal.