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17/07/26
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USD/CHF Rangebound as Geopolitical Risks Support Dollar and Franc
USD/CHF traded with little direction on Friday, holding near 0.8090 in Asian hours after posting modest gains in the previous session. The pair remains caught between competing forces as investors weigh geopolitical risks against shifting expectations for US monetary policy.
The US Dollar has found support from rising tensions in the Middle East. Reports indicated that Iran told Yemen’s Houthi movement to prepare to block a key Red Sea oil route if the United States strikes Iranian power infrastructure. Additional reports of explosions in several regional locations added to concerns over broader instability, reinforcing demand for defensive assets.
At the same time, the Dollar’s advance has been constrained by recent US economic data. Inflation readings for June came in softer than expected, while producer prices unexpectedly declined. Those figures have led traders to abandon expectations of a near-term Federal Reserve rate increase. Although weekly jobless claims fell to a two-month low, market participants now see little chance of a rate move later this month, with September still viewed as uncertain.
The Swiss Franc has also benefited from the same risk-sensitive environment. Higher oil prices and the possibility of wider disruption to energy flows have increased caution in global markets, supporting the appeal of the franc as a safe-haven currency. As a result, USD/CHF has struggled to establish a clear trend despite the Dollar’s intermittent strength.
In Switzerland, the central bank left its policy rate unchanged at 0% in June and said the medium-term inflation outlook had not changed materially. Even so, policymakers acknowledged that geopolitical tensions have lifted short-term inflation risks. That assessment suggests the Swiss National Bank remains attentive to external shocks, even while keeping policy steady for now.
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