EUR/CHF tumbles as ECB hints at end of rate hike cycle

• EUR/CHF drops 0.52% to 0.9538 after ECB raises rates but signals it could be the last hike in the current cycle.
• ECB President Christine Lagarde projects subdued economic growth and falling inflation, tilting risks to the downside.
• Swiss Producer and Import prices cool, setting the stage for the SNB to hold rates steady in its September 21 meeting.

The Euro (EUR) sank versus the Swiss Franc (CHF) on Thursday after the European Central Bank (ECB) decided to lift rates but signaled that it “could” be the last rate hike. Hence, the EUR/CHF has plunged from its daily high of 0.9598 towards 0.9538, losing 0.52%.

ECB’s rate hike and dovish outlook sends EUR/CHF spiraling down, while SNB eyes steady rates

On Thursday, the European Central Bank (ECB) decided to lift rates by 25 basis points for the tenth time since its tightening cycle began, though hinted that it could be the latest increase, despite leaving the door open for additional tightening. The statement added that rates must remain at higher levels, and growth projections were revised downward.

After the ECB released the statement, ECB’s President Christine Lagarde said that economic growth would remain subdued, projecting a weak third quarter. She added that inflation would fall in coming months and stressed that risks-to growth are tilted to the downside. Mrs. Lagarde added that some inflation indicators remain elevated, and she didn’t say rates in the Eurozone (EU) had peaked.

On the ECB’s decision, the EUR/CHF plunged from around daily highs near 0.9600 toward 0.9550s, while the German 10-year bund dropped three basis points down to 2.599%.

Earlier, Producer and Import prices in Switzerland cooled down, opening the door for the Swiss National Bank (SNB) to hold rates unchanged at the September 21 monetary policy meeting.

Given the fundamental backdrop suggesting the ECB has finished increasing rates, alongside the SNB set to raise rates at the upcoming monetary policy meeting, means the EUR/CHF could extend its losses in the near term.

EUR/CHF Price Analysis: Technical outlook

The daily chart portrays the pair slid after testing the 50-day Moving Average (DMA) at 0.9592, which fell to a four-day low of 0.9534 before stabilizing at current exchange rates. Nevertheless, the EUR/CHF is shy from extending its losses, as it needs to break below the August 23 swing low of 0.9515, which, once cleared, the pair could dive towards the September 26 low of 0.9403.