The euro rose 0.4 percent to 1.237 francs, its highest since October and above the 1.20-per-euro cap which the SNB has held in place for more than two years. Against the dollar, the franc gained 0.5 percent to $0.9084.
UBS pointed to signs that Swiss funds and banks are beginning to invest and loan money abroad again - something they have not done since 2008 and an important precondition for the franc falling back.
(Read more: Contrarian call: US dollar to weaken further in 2014)
UBS has a near-term target of 1.25 francs to the euro, Siegenthaler noted.
Looking ahead, currency trading will likely be swayed by Friday's U.S. jobs report, which may give a clue as to how quickly the Fed will taper its bond buying. Overall the outlook on interest rates is against the euro.
Ahead of the jobs data, market participants will focus on minutes from the Fed's last monetary policy meeting, scheduled for release on Wednesday.
Meanwhile, the euro was helped by a euro zone inflation number which was not expected to be low enough to force the European Central Bank into more action immediately to loosen monetary policy. The ECB meets on Thursday.
German retail sales and unemployment data were also better than expected, while Ireland's successful bond issue offered more optimism on countries in the bloc under sovereign bailout programs.
The euro rose as high as $1.3656, but last traded flat at $1.3618, remaining above Monday's one-month low of $1.3570, according to Reuters data.