Options Flash Caution on Swiss Franc as SNB Steps Up Rhetoric
(Bloomberg) — The Swiss franc’s rally may be running out of steam, history and charts suggest, after its latest burst of strength ran into a familiar obstacle: the Swiss National Bank.
The currency briefly pushed toward 0.90 versus the euro for the first time since 2015 on Monday, before reversing course to end the session weaker, around 0.9110 per euro. Options markets echoed the loss of momentum as risk reversals — a gauge of demand for bullish versus bearish protection — saw one of the sharpest intraday swings in history, exceeded in force by only 2% of past moves.
The turnaround came after central bank officials hardened their language on foreign exchange, saying are “increasingly prepared” to intervene as fallout from the war in Iran reverberates through markets. Investors have sought out the franc as a safe haven, driving the currency higher while depressing inflation in Switzerland.
SNB Touts Intervention Threat as Iran Crisis Rattles Markets (2)
Traders paid up for near-term franc upside early in the session, then rapidly walked those bets back once the SNB’s warning hit. By the close, pricing still signaled a franc-bullish bias, but the market was no longer paying for imminent follow-through.
Flows from the Depository Trust & Clearing Corporation show similar price action. At the end of Monday’s trading, roughly 60% of euro-Swiss franc vanilla options stood for a stronger common currency, consistent with investors taking profits on franc strength or hedging against a rebound in the pair. Price action in spot also left a technical footprint associated with reversals.
For now, strategists see the SNB’s rhetoric as more of a speed bump than a trend-breaker. “While recent price action with a stronger real trade-weighted Swiss franc does increase intervention risk, we think intervention would merely cap the topside rather than trigger a broad reversal for the Swiss franc,” wrote Jens Peter Sorsensen, chief analyst at Danske Bank.
In prior episodes where risk reversals plunged intraday and then retraced meaningfully by the close, euro-franc often saw limited follow-through over the next couple of sessions, and over the following one to two weeks more often resolved with the euro grinding higher.
The euro headed for a second day of gains versus the franc, up by 0.1% at 0.9118 in early London trading.
NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice. ©2026 Bloomberg L.P.
