The EUR/CHF currency pair settled above recent low of 0.9212, its weakest level since November 22nd 2024, in the wake of the European Central Bank’s policy decision.

In the meantime, optimism surrounding the progress in trade negotiations between the United States, Japan and Italy prompted investors to pare flows into safe haven assets such as the Swiss Franc.

The ECB lowered all three of its benchmark interest rates by 25 basis points:

– the main refinancing operations rate to 2.40%;
– the deposit facility rate to 2.25%;
– the marginal lending rate to 2.65%.

The policy decision reflected higher confidence that inflation was on track to return sustainably to the ECB’s 2% target. Policy makers noted that wage growth was moderating, while businesses were absorbing some of the cost pressure. Services inflation within the Euro Area has also been easing.

However, the ECB pointed out that the deteriorating outlook for the bloc’s economic growth remained a primary concern. The weakening growth forecast is largely attributed to escalating global trade tensions and the associated uncertainty they generate. In its policy statement, the ECB underscored the intensifying trade disputes were expected to dampen confidence among both households and businesses. Furthermore, the central bank expressed apprehension that the volatile market reactions to these trade tensions could lead to a tightening of overall financing conditions within the Euro Area and further hinder economic activity.

During the post-meeting press conference, ECB President Christine Lagarde said that the decision to lower rates was agreed upon by all Governing Council members. Lagarde acknowledged the “exceptional uncertainty” clouding the economic outlook, citing new trade barriers facing Euro Area exporters, disruptions of international commerce, financial market tensions and geopolitical uncertainty as significant headwinds.

Meanwhile, media reports stated that the United States and Japan had been making considerable headway in their negotiations, particularly concerning the complex issues of tariffs and military spending. US President Donald Trump addressed this week’s meeting on trade with the Japanese delegation as “big progress.”

Also this week, Trump and ally Italian Prime Minister Giorgia Meloni expressed optimism over resolving the US-EU trade tensions.

On the data front, Switzerland’s trade surplus has increased to CHF 5.3 billion in March from CHF 4.3 billion in February. It has been the largest trade surplus since October 2024.

The EUR/CHF currency pair settled 0.18% lower at 0.9288 on Friday.

The minor Forex pair gained 0.43% for the week.