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18/06/26
30
USD/CHF Slips as Iran Deal Lifts Safe-Haven Franc
The USD/CHF pair slipped to about 0.799 during the early European session on Thursday as the US Dollar came under pressure against the Swiss Franc. Sentiment was shaped by a newly signed interim agreement between the United States and Iran, which was presented as a step toward ending the conflict in the region and reduced demand for the dollar as a safe-haven currency.
The agreement was electronically signed on Wednesday by US President Donald Trump and Iran’s President Masoud Pezeshkian. Pakistan’s Prime Minister Shehbaz Sharif said the deal was taking immediate effect after being signed by both Washington and Tehran. The development marked a notable easing in geopolitical tensions and helped support the Franc.
At the same time, the Federal Reserve kept interest rates unchanged at 3.50% to 3.75% at its June meeting, while indicating that borrowing costs could rise later this year if inflation remains elevated. Traders have largely moved to price in a potential hike in the coming months, as policymakers continue to prioritize price stability. A more hawkish message from the Fed could give the dollar short-term support, even after its recent retreat.
Attention now turns to the Swiss National Bank, which is due to announce its policy decision later on Thursday. Economists surveyed by Reuters expect the SNB to leave its key rate at 0% and to keep it there for the rest of the year. That outlook reflects Switzerland’s subdued inflation backdrop and the view that price pressures remain relatively contained.
Economists at Bank of America said the combination of energy-market uncertainty and the country’s low starting point for inflation means the SNB faces less urgency than many other central banks. The bank’s baseline forecast is that Switzerland’s zero-interest-rate stance will remain in place until the end of 2027.
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