Swiss Franc (EURCHF): Europe’s Stronghold (2026 Outlook, Ep.5)Euro vs Swiss FrancICMARKETS:EURCHFKrisadaYoonaisilSwiss Franc (EURCHF): Europe’s Defensive Stronghold This series consists of 12 research notes covering 12 instruments. Each episode blends fundamental and technical analysis to frame a structured set of investment themes for 2026. This is Episode 5, focusing on Switzerland’s fundamentals to outline the 2026 outlook for the Swiss franc (USDCHF) and the key drivers likely to shape its performance throughout the year. Macro Analysis 1. With the second-largest economy in Europe, France, facing default risk, the broader region could come under pressure, especially as Germany alone may not be strong enough to support Europe after years of weak growth, as discussed in Episode 3. Against this backdrop, investors may consider holding at least one safe-haven currency to diversify portfolios and improve return potential. 2. The Swiss franc has long been regarded as Europe’s safe-haven currency. During risk-off periods driven by crises, war, or recession, global capital tends to flow into the Swiss financial system, supporting CHF strength. This reflects Switzerland’s status as a global financial center and one of the world’s leading private banking hubs. 3. That credibility is also rooted in Switzerland’s long-standing geopolitical neutrality and relatively low exposure to war-related risks. This matters even more today, as geopolitical tensions continue to rise globally. If conflict escalates, Switzerland is likely to face less direct risk, which in turn helps reinforce the defensive appeal of the Swiss franc. 4. In addition, Switzerland’s domestic fundamentals remain strong. Inflation is relatively low, while fiscal discipline is exceptionally solid due to low public debt and prudent budget management. Switzerland’s government debt-to-GDP ratio remains low compared with the rest of Europe. According to the OECD, government debt stood at 38.3% of GDP in 2024, versus the EU average of 81.6%. The country also applies a debt brake rule to prevent structural fiscal imbalances from emerging. 5. Switzerland has also maintained a persistent current account surplus, while its fiscal position remains healthy. The OECD expects Switzerland’s general government balance to remain slightly in surplus in 2025, while the IMF reported a surplus of 0.6% of GDP in 2024 and projects around 0.3% in 2025. This suggests the government is not under the kind of fiscal strain seen in many other developed economies. 6. In summary, these factors support the Swiss franc’s safe-haven status through a combination of strong fundamentals, lasting market confidence, and a consistent pattern of capital inflows during crises. The market continues to view CHF as a genuinely defensive asset, making it an effective hedge within portfolios and reinforcing its role as Europe’s defensive currency. The Swiss franc has appreciated against the euro over the past several decades, and there is still no reason to expect that long-term trend to reverse. Moverover, a similar tendency can also be seen in the Swiss franc’s performance against the US dollar. Technical Analysis 7. EURCHF has been in bearish momentum consistently since 2007. Price has formed a series of lower swings within a descending channel, while the EMA stack continues to signal a sustained downtrend. Any rebound is therefore likely to be temporary before the broader decline resumes. 8. The current rebound faces resistance at the former support zone around 0.9220. If the price breaks above this level, the upper bound of the descending channel would become the next resistance before resuming the downtrend. 9. However, if EURCHF fails to break above 0.9220, the pair may breaks below the previous low and continue bearish momentum. Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness