Although the Swiss National Bank (SNB) has announced it will impose negative rates on sight deposits as of 22 January, the selling pressures on EUR/CHF have not weakened. Indeed, prices are again dangerously close to 1.2000 and the recent flat price evolution suggests FX interventions. Looking forward, as the ECB is expected to increase the size of its balance sheet, the Euro should depreciate, weighing on EUR/CHF. As a result, more actions from the SNB will likely be needed to defend the floor. Given that the SNB has introduced negative interest rates to curb some of the demand for the Swiss franc, further lower rates are expected to reduce the need for FX interventions.
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