It was utter chaos in January, 2015: the Swiss National Bank (SNB) capitulated on its self-made 1.20 floor against the euro on EUR/CHF. The bottom completely fell out the currency pair and caused ripple effects around the world of forex. I barely traded the Swiss franc since then specifically because of what I perceived as extreme central bank risk. I even stopped paying the Swissie much attention…until now. Over three years later, EUR/CHF is FINALLY returning to that magic 1.20 level.

The Swiss franc has shown consistent weakness since early 2017. Against the euro, EUR/CHF has sprinted off 2018 lows.

A trip down memory lane: EUR/CHF has FINALLY just about erased all its loss from January, 2015.

Source: TradingView.com

The weekly chart above shows that the reversal of EUR/CHF has occurred in just two main spurts: the initial relief rally and the follow-on rally from the 2017 breakout. In between, the Swiss franc never mounted much of a display in strength.

The SNB has carefully curated and cultivated this weakness. Just this past Saturday, Thomas Jordan, the SNB Chairman, reiterated for the upteenth time that the SNB has no imminent plans to back off its ultra-easy monetary policy. From Reuters:

“‘…it [is] not yet the time to change to change monetary policy,’ Jordan told Swiss newspaper La Liberte in an interview published on Saturday. ‘Such a change would be premature,’ he said. ‘We do not want to provoke an appreciation of the Swiss franc.’ Jordan said the economic situation had improved from a year earlier, but Swiss inflation still remained very low. ‘The situation remains fragile in the foreign exchange market,’ Jordan said.’”

Here is what the SNB had to say a month ago during its last pronouncement on monetary policy where it left its policy rates at rock bottom levels: interest on sight deposits at –0.75% and the target range for the three-month Libor at between –1.25% and –0.25%.