EUR/CHF confined in narrow range ahead of ECB rate decision

The EUR/CHF currency pair traded within a tight range on Thursday after Swiss trade data and as focus sets on the outcome of the European Central Bank’s policy meeting later today.

The European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 3.40% at its October policy meeting, while its deposit facility rate is expected to be reduced to 3.25% from 3.50% currently.

The ECB has gained more confidence that inflation would return to target by the end of 2025, the minutes from the bank’s September meeting showed.

Yet, volatility is expected to continue by the end of this year, with relatively high core inflation remaining.

The ECB also highlighted that a gradual reduction in interest rates would be appropriate in case incoming data came in line with policy makers’ projections.

Market players will be closely watching ECB President Christine Lagarde’s press conference for any hints regarding future interest rate trajectory.

Meanwhile, Switzerland reported its smallest trade surplus since April in September. The nation’s trade surplus narrowed to CHF 3.9 billion in September from CHF 4.0 billion in August.

Total exports shrank 1.4% month-over-month to CHF 21.9 billion, while total imports dropped 1.1% to CHF 18.0 billion.

As of 8:34 GMT on Thursday the EUR/CHF currency pair was edging down 0.12% to trade at 0.9387.