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Swiss Franc slips against the US Dollar on diverging monetary policy expectations

  • USD/CHF climbs to its highest level since June 2025, extending its advance for a sixth consecutive day.
  • The Swiss Franc slips after Bloomberg reports the SNB may maintain zero interest rates through 2027.
  • Markets await the Federal Reserve’s interest rate decision on Wednesday.

USD/CHF climbs to fresh highs since June 2025 on Monday after Bloomberg reported that the Swiss National Bank (SNB) could keep its policy rate at zero until the end of 2027. The SNB later declined to comment on the report, according to Reuters. At the time of writing, the pair trades around 0.8187, extending its gains for a sixth consecutive day.

Swiss inflation remains subdued and comfortably within the SNB’s 0%-2% price-stability range. Elevated Oil prices since the US-Iran war began have increased near-term inflation risks, but the impact has been far more contained in Switzerland than in the United States.

The Bloomberg report noted that the outlook is based mainly on current inflation forecasts and assumes no major new shocks, citing people familiar with the thinking inside the central bank.

Diverging monetary policy expectations keep USD/CHF tilted to the upside in the near term. While the SNB is expected to keep rates at zero, traders increasingly expect the Federal Reserve (Fed) to raise interest rates later this year to curb inflation.

The Fed announces its monetary policy decision on Wednesday and is widely expected to leave interest rates unchanged at 3.50%-3.75%. However, traders still price in a 33% chance of an immediate hike, while the probability of a rate increase in September stands near 81%, according to the CME FedWatch Tool.

The wide interest-rate gap between the two countries favours the US Dollar (USD). Meanwhile, the Greenback has also emerged as the preferred safe-haven currency during the US-Iran war, while the SNB’s readiness to curb excessive strength in the Swiss Franc limits demand for the currency.

A temporary pause in attacks between the United States and Iran initially weighed on the US Dollar earlier in the day. However, the optimism faded as the prospects of a peace agreement appear slim.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.47, recovering from an intraday low of 101.12.

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Japanese Yen firms as easing tensions weigh on USD before Fed, BoJ

  • The Japanese Yen strengthens against the US Dollar as tensions between the United States and Iran ease.
  • Investors await this week’s monetary policy decisions from the Federal Reserve and the Bank of Japan.
  • US Durable Goods Orders disappoint expectations, limiting support for the US Dollar.

USD/JPY edges lower on Monday and trades around 163.70 at the time of writing, down 0.09% on the day, as the US Dollar (USD) comes under pressure from improving risk sentiment following the latest geopolitical developments. Market mood improved after Washington and Tehran confirmed they had paused attacks against each other, reviving hopes for renewed diplomatic efforts between the two countries.

The US Dollar’s weakness is also reflected in the US Dollar Index (DXY), which remains in negative territory, while US equities are moving higher, highlighting a more favorable environment for risk assets.

Market participants are now turning their attention to this week’s monetary policy decisions from the Federal Reserve (Fed), due on Wednesday, and the Bank of Japan (BoJ), scheduled for Friday. Both central banks are widely expected to leave interest rates unchanged. Investors will mainly focus on the tone of policymakers, after Fed Chair Kevin Warsh recently stated that forward guidance is not well suited to the current policy environment.

In Japan, investors continue to expect the BoJ to maintain a gradual tightening bias. According to a recent Reuters poll, a large majority of economists expect the central bank to deliver another interest rate hike by the end of the year, supporting expectations for a continued normalization of Japanese monetary policy.

US economic data released on Monday also provided only limited support for the Greenback. Durable Goods Orders increased by just 0.3% in June, well below market expectations of a 1.6% rise. Excluding transportation, orders rose 0.6%, while computers and electronic products made the strongest contribution to the increase.

The combination of easing geopolitical tensions, weaker-than-expected US economic data and caution ahead of the Fed and BoJ policy meetings is therefore keeping USD/JPY under modest pressure at the start of the week.

BoJ under pressure to turn more hawkish as Yen hovers near multi-decade lows

Analysts at MUFG note that the recent “drop in energy prices at the start of this week has brought some much-needed relief for Japanese policymakers and helped to slow upward momentum for USD/JPY which has held just below the 164.00-level since late last week.” They add that “market attention in the week ahead will be on how the BoJ responds to inflation pressures in Japan,” with investors focused on whether the central bank uses the upcoming meeting to shift guidance.

MUFG points out that “the BoJ are expected to leave rates on hold after hiking at the last meeting in June, but market participants will be watching closely to see if they provide any hawkish signals over future hikes.” The bank highlights a recent “Bloomberg” report suggesting “that the BoJ was open to a faster pace of rate hikes than every six months while adding that yen weakness was increasing upside inflation risks.” In their view, “without hawkish guidance, the yen is vulnerable to further weakness especially if the Fed delivers a hawkish policy surprise this week.”

Strategists at BNY similarly argue that “the BoJ is widely expected to leave policy unchanged, with guidance and updated projections the key focus for timing signals.” They flag that “Tokyo Consumer Price Index (CPI), retail sales and industrial production will provide the final assessment of economic conditions ahead of the meeting,” helping to shape the policy debate. BNY expects “the BoJ is expected to keep the target rate unchanged at 1.00%, but a hawkish message committing to further tightening is probably a matter of urgency as the JPY slides beyond four-decade lows.” They warn that “fears are growing over fiscal conditions as well in light of the recent budget, and the BoJ needs to signal some tightening in financial conditions to manage the risks arising from fiscal impulse.” Until the central bank “gets ahead of expectations, the JPY will struggle, especially as balance-of-payments risks resurface.”

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British Pound tumbles as risk-off mood boosts the US Dollar

  • GBP/USD retreats from 1.3363 as risk sentiment turns defensive.
  • Chipmaking headlines pressure Sterling as markets await Fed decision.
  • BoE expected to hold rates despite July Oil-price shock.

The Pound Sterling retreats by 0.13% even though the Greenback is flat during the day, as risk appetite shifted sour on news that a Chinese state-backed company is producing chipmaking machines, prompting a sell-off in ASML, the Dutch-based company.  The GBP/USD trades at 1.3305, after reaching a high of 1.3363.

GBP/USD slips as chipmaking worries, Fed-BoE caution, UK political uncertainty weighed

The de-escalation of the Middle East conflict is a relief for major central banks, as Oil prices slide as the US paused attacks on Iran over the weekend. The US President Donald Trump warned of further military action if negotiations between Washington and Tehran fail. He said that attacks would be “very powerful.”

On Monday, the US economic docket featured Durable Goods Orders for June, which improved from -4% contraction to 0.3% MoM, missing estimates of 1.6% expansion. However, traders’ focus will be on the Federal Reserve (Fed) monetary policy meeting, which is expected to keep rates unchanged, with odds at 60%. The chances of a 25-basis-point rate hike are slim, at about 40%, according to Prime Terminal data.

Source: Prime Terminal

In the UK, the schedule was absent, but investors are also awaiting the Bank of England (BoE) monetary policy meeting. Here, investors are confident that the UK central bank will keep rates unchanged at 3.75% despite the jump in Oil prices in July.

Sterling would remain pressured as investors assess the intentions of the new government led by Prime Minister Andy Burnham.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3304, keeping a mild bearish bias as spot holds below the simple moving average cluster now aligned near 1.3367. The pair also remains under the broader downward resistance trend line projected from the 1.3465 break area, while the Relative Strength Index (14) around 43 suggests subdued upside momentum rather than outright selling capitulation.

On the topside, initial resistance is seen at the simple moving average zone around 1.3367, with a sustained break exposing the downtrend barrier linked to the 1.3465 region. On the downside, the next notable technical floor is the rising support trend line anchored near 1.3159, where buyers would be expected to regroup if bearish pressure extends.

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Euro gains strongly against US Dollar on revival of risk-on sentiment

  • The Euro jumps to near 1.1410 against the US Dollar as safe-haven demand diminishes.
  • The exchange of attacks in the Middle East pauses as the list containing targets in Iran is exhausted.
  • Investors await the Fed’s policy announcement and the flash Eurozone HICP data for July.

The Euro (EUR) trades 0.36% higher to near 1.1410 against the US Dollar (USD) during the European trading session on Monday. The major currency pair trades firmly as the revival of risk-on market sentiment has diminished the safe-haven appeal of the US Dollar.

In the European trade, S&P500 futures trade almost 1% higher to near 7,485, reflecting a risk-on market mood. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.25% lower to near 101.20.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD-0.40%-0.25%-0.20%0.01%-0.41%-0.30%-0.48%
EUR0.40%0.11%0.19%0.39%-0.02%0.11%-0.10%
GBP0.25%-0.11%0.07%0.28%-0.14%-0.04%-0.21%
JPY0.20%-0.19%-0.07%0.17%-0.23%-0.13%-0.29%
CAD-0.01%-0.39%-0.28%-0.17%-0.40%-0.30%-0.48%
AUD0.41%0.02%0.14%0.23%0.40%0.13%-0.09%
NZD0.30%-0.11%0.04%0.13%0.30%-0.13%-0.21%
CHF0.48%0.10%0.21%0.29%0.48%0.09%0.21%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The risk-appetite of financial markets has improved amidst the pause in military aggression between the United States (US) and Iran. Over the weekend, a spokesperson from the US military stated that the attacks on Iran have paused as the provided target list has been exhausted.

US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. The Guardian reported.

On the domestic front, investors await the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. The Fed is expected to leave interest rates unchanged in the range of 3.50%-3.75%. The impact of Fed Chair Kevin Warsh’s press conference is expected to be insignificant, as he clarified in the previous press conference that “so-called forward guidance is not well-suited in the current policy juncture”.

In the Eurozone, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for July, which will be released on Friday. The inflation data will have a significant impact on the European Central Bank’s (ECB) interest rate expectations, given that the majority of policymakers have warned of upside inflation risks.

On Thursday, ECB President Christine Lagarde said in the press conference, “Risks to inflation tilted to upside.” Lagarde added, “Energy shock likely to keep inflation well above target into first half of 2027.”

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EUR/GBP Price Forecast: In a positive trend with bulls eyeing 0.8555 resistance

  • EUR/GBP dips found buyers at 0.8530, which keeps the 0.8555 high on the bulls’ focus.
  • A cease of hostilities in Iran and the decline in oil prices have given a fresh boost to the Euro.
  • The Euro is on a bullish correction after a 2.5% sell-off from June’s highs.

The Euro (EUR) has picked up towards the 0.8540 area against the British Pound (GBP) on Monday, after a mild pullback on Friday found support at 0.8530. The pair maintains the immediate bullish trend from mid-July lows at 0.8455, with bulls looking at three-week highs in the area of 0.8555. 

The Euro is drawing support from a moderate relief rally on Monday, as the US and Iran halted their hostilities, which allowed Oil prices to decline about 9% from last week’s highs, with the barrel of Brent Oil down to $87.40 from above $96.00 last Thursday. Eurozone countries are net Oil importers, and the Crude rally seen over the last few weeks had threatened to strangle economic activity.

In the UK, Prime Minister Andrew Burnham’s spending plans keep investors on edge while the focus this week shifts to the Bank of England (BoE) monetary policy decision. The BoE will, all but certain, leave interest rates on hold, but investors will be very attentive to the vote split and Governor Bailey’s press release to assess the chances of any rate hike in the near-term.

Technical Analysis: In a bullish correction following the June-July sell-off

EUR/GBP Chart Analysis

EUR/GBP trades at 0.8543, keeping a constructive near-term tone as it holds within a bullish channel from mid-July lows. The pair is correcting higher after a 2.5% decline from June highs, with momentum indicators hinting at a mild upside bias. The Relative Strength Index (14) is around 60, hinting at positive momentum, even as the MACD (12, 26, close, 9) has slipped marginally into negative territory.

The bullish structure maintains the July 8 and 24 highs at 0.8555 in play. Above that level, the top of the channel, now around 0.8565, and July 2 and 3 highs, in the area of 0.8575, are likely to test bulls.

On the downside, immediate support emerges at the confluence of the channel floor and July 23 and 24 lows, around 0.8530. Below here, a previous resistance area, around 0.8510 (July 17, 20 highs), is likely to be targeted ahead of the July 20 low, at 0.8483.

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Indian Rupee recovers further as US-Iran war pause hits oil prices

  • The Indian Rupee gains further, capitalizing on a correction in oil prices and the US Dollar.
  • US President Donald Trump pauses attacks on Iran to allow time for diplomacy.
  • Investors expect the Fed to leave interest rates unchanged on Wednesday.

The Indian Rupee (INR) extends its recovery against the US Dollar (USD) at the start of the Federal Reserve’s (Fed) monetary policy week. The USD/INR pair falls further to near 96.10 as the pause in military aggression between the United States (US) and Iran has weighed heavily on oil prices and has diminished the safe-haven appeal of the US Dollar.

In the opening trade, the MCX Crude Oil contract expiring on August 19 trades 4.75% lower to near Rs. 8,200.

The appeal of currencies from economies, such as India, which rely heavily on oil imports to fulfill their energy needs, improves when oil prices fall sharply.

Meanwhile, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.25% lower to near 101.25.

US holds strikes on Iran on exhaustion of target list

Two-week-long exchange of attacks between the US and Iran paused over the weekend as Washington confirmed that further military aggression would be unnecessary, confirming that the target list has been exhausted.

According to Axios, Adm Bradley Cooper, the top US military commander in the region, had told Trump the US military campaign had reached the limits of its effectiveness, The Guardian reported. Cooper added that there was little point in continuing the bombing campaign without a return to major combat operations.

In response, Iran also paused attacking US bases in its neighbouring nations, but confirmed that its position remains “attack for attack”.

Meanwhile, US ambassador to the United Nations (UN), Mike Waltz, also told Fox News on ⁠Sunday that President Donald Trump had decided to pause US attacks to allow more time for diplomacy, Reuters reports. This has renewed hopes for diplomatic efforts between both nations.

Investors await key Fed policy

This week, the major trigger for global markets will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, in which the central bank is expected to leave interest rates unchanged in the range of 3.50%-3.75%. So far this year, the Fed has not done any monetary policy adjustments.

Investors will pay close attention to the monetary policy statement and Fed Chair Kevin Warsh’s press conference to get fresh cues regarding inflation and the economic outlook. Warsh is unlikely to deliver any remarks regarding the monetary policy guidance, as he clarified in its last press conference that “so-called forward guidance is not well-suited in the current policy juncture”.

Technical Analysis: USD/INR falls toward 20-day EMA

USD/INR trades lower at around 96.26 at press time. The pair remains underpinned by a constructive near-term bias, with spot holding above the 20-day Exponential Moving Average (EMA) at 95.9851.

The mildly positive 14-day Relative Strength Index around 57 suggests ongoing bullish momentum, though not yet in overbought territory, allowing room for further gains while the price action stays supported above the short-term EMA.

On the downside, immediate support is now seen at the 20-day EMA near 95.99, which protects the recent advance; a daily close below this level would hint at a deeper corrective phase toward prior price congestion. Looking up, the all-time high at around 97.10 will be the key resistance level.

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EUR/JPY Price Holds gains around 186.50 within rising wedge

  • EUR/JPY could face initial resistance around the rising wedge top at 186.90.
  • The 14-day Relative Strength Index near 60 indicates firm upside momentum without entering overbought territory.
  • The primary support lies at the nine-day EMA of 186.04.

EUR/JPY gains ground after registering minor losses in the previous day, trading around 186.50 during the Asian hours on Monday. The currency cross is keeping a bullish near-term bias as it holds above both the nine-period and 50-period Exponential Moving Averages (EMAs). The configuration of the short-term EMA above the longer-term EMA suggests a constructive trend backdrop.

Meanwhile, the 14-day Relative Strength Index (RSI) near 60 points to firm but not yet overbought upside momentum, hinting that buyers still retain control unless price slips back below the nearby averages. However, the daily chart technical analysis shows that the EUR/JPY cross is rising within a rising wedge, indicating a strong bearish reversal risk.

The EUR/JPY cross could find the primary resistance at the upper boundary of the rising wedge around 186.90. Further advances could support the currency cross to explore the region around the all-time high of 187.95, which was recorded on April 17.

On the downside, the initial support lies at the nine-day EMA of 186.04, followed by the 50-day EMA at 185.31, aligned with the lower boundary of the rising wedge. A break below the wedge put downward pressure on the EUR/JPY cross to navigate the region around the five-month low of 181.87, recorded on March 16, and the seven-month low of 180.81.

Chart Analysis EUR/JPY
EUR/JPY: Daily Chart
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Swiss Franc climbs as US Dollar falls on easing safe-haven demand

  • USD/CHF falls as easing US-Iran tensions weaken the US Dollar following a weekend pause in hostilities.
  • The Fed will likely hold rates steady in July before potential September hikes.
  • Falling Swiss 10-year bond yields, now near 0.46%, could weigh on the Swiss Franc.

USD/CHF depreciates after five days of losses, trading around 0.8150 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) declines on easing geopolitical tensions following a weekend pause in military hostilities between the US and Iran, offering a reprieve after 13 days of escalating conflict.

US halted strikes amid growing concerns over depleting interceptor supplies and a shrinking list of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the military campaign would severely strain critical munitions reserves.

However, market participants remain cautious about potential supply disruptions after Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.

Traders expect the Federal Reserve (Fed) to hold interest rates steady on Wednesday before resuming rate hikes in September, though a minority of market participants still anticipate a surprise move at this week’s meeting. Moving forward, investors are closely watching upcoming economic indicators, including advance Q2 GDP data, PCE inflation figures, and earnings reports from major US corporations, for further insight into the underlying strength of the economy.

The USD/CHF pair could rebound as falling Swiss government bond yields may weigh on the Swiss Franc (CHF). With the 10-year Swiss yield dropping near 0.46%, reduced returns on domestic fixed-income assets are prompting global investors to rotate capital toward higher-yielding foreign bonds.