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CHF rises as USD slips on Israel-Lebanon ceasefire news

  • USD/CHF falls as the US Dollar struggles on easing risk aversion after Israel and Lebanon renewed their ceasefire on Wednesday.
  • The Greenback may regain its ground as strong May jobs data fuels expectations that the Fed will raise interest rates.
  • Schlegel said recently that the SNB is ready to intervene against Middle East-driven Swiss Franc overvaluation pressures.

USD/CHF halts its three-day winning streak, trading around 0.7910 during the Asian hours on Thursday. The pair depreciates as the US Dollar (USD) loses ground on easing risk aversion following the news that Israel and Lebanon on Wednesday agreed to renew a ceasefire. However, it would require a “complete cessation” of fire by Iran-backed Hezbollah. The agreement was announced in a joint statement after US-led talks in Washington.

The Israel and Lebanon do not have formal diplomatic relations, though also agreed to establish several “pilot security zones” in which the Lebanese armed forces “will take exclusive control of the territory to the exclusion of all non-state actors.”

The downside of the USD/CHF pair could be restrained as the Greenback may regain its ground amid rising expectations that the US Federal Reserve (Fed) will raise interest rates this year. Stronger-than-expected US jobs data, including the May ADP private payrolls and JOLTS job openings, suggested a resilient US labor market. These reports might prompt traders to raise their bets that the Fed will keep interest rates higher for longer.

Market expectations have shifted dramatically as the war in Iran continues to disrupt energy markets, driving up oil prices and fueling inflation. Consequently, traders are adjusting to a more hawkish outlook, with the CME FedWatch Tool now pricing in a nearly 42% probability of a Federal Reserve interest-rate hike in December.

Swiss National Bank (SNB) Chairman Martin Schlegel noted that the Swiss Franc’s real overvaluation is notably lower than its nominal overvaluation. Schlegel added that the central bank has increased its readiness to intervene in the foreign exchange market to counter safe-haven appreciation pressures driven by escalating tensions in the Middle East.

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Canadian Dollar drops to two-month low vs USD as Fed-BoC gap counter higher Oil prices

  • USD/CAD retains a bullish bias and continues to draw support from a combination of factors.
  • Domestic growth concerns and the divergent BoC-Fed expectations undermine the Loonie.
  • Geopolitical risks benefit the safe-haven USD and further offer some support to spot prices.

The USD/CAD pair climbs to a nearly two-week high during the Asian session on Thursday, with bulls now looking to build on the positive momentum further beyond the 1.3900 mark.

The Canadian Dollar (CAD) continues with its relative underperformance against the US Dollar amid slowing domestic growth, a softening labor market, and interest rate divergence between the Bank of Canada (BoC) and the US Federal Reserve (Fed). In fact, Canada faced consecutive quarters of economic contraction during the January-March 2026 period, confirming a technical recession. Adding to this, rising unemployment and weakening consumer demand could force the BoC to adopt a more dovish stance.

In contrast, traders are currently assigning over a 50% chance that the Fed will raise interest rates in 2026 amid sticky inflation. This, along with persistent geopolitical uncertainties, acts as a tailwind for the safe-haven USD and continues to offer some support to the USD/CAD pair. In the latest development surrounding the Middle East conflict, the US military said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors – Kuwait and Bahrain.

Furthermore, the lack of a breakthrough in US-Iran diplomatic negotiations, amid a standoff over Tehran’s nuclear program and the Strait of Hormuz, keeps geopolitical risks in play. This, in turn, assists Crude Oil prices in preserving weekly gains registered over the past three days, which helps limit further losses for the commodity-linked Loonie. Adding to this, the Israel-Lebanon agreement on the implementation of a ‌ceasefire keeps a lid on the safe-haven USD and contributes to capping the upside for the USD/CAD pair.

Investors also seem hesitant and opt to wait for the release of monthly employment details from the US and Canada on Friday. The crucial US Nonfarm Payrolls (NFP) report will be looked for more cues about the Fed’s policy path, which, along with the incoming geopolitical headlines, will drive the USD demand. Moreover, Crude Oil price dynamics should provide a fresh impetus to the USD/CAD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside.

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EUR/USD declines as traders adopt caution on risk-off mood

  • EUR/USD depreciates as Middle East tensions drive safe-haven demand for the firm US Dollar.
  • CENTCOM announced it successfully intercepted multiple Iranian missile and drone strikes targeting Kuwait and Bahrain.
  • US Dollar remains firm as the Strait of Hormuz closure raises energy prices and inflation, keeping Fed rates higher for longer.

EUR/USD inches lower after moving little in the previous day, trading around 1.1630 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) remains firm, driven by stalled US-Iran peace negotiations and renewed tensions in the Middle East continued to underpin safe-haven demand.

US Central Command (CENTCOM) announced Tuesday that it successfully defeated a series of Iranian missile and drone strikes targeting Kuwait and Bahrain. In response to the regional aggression, US forces also executed self-defense strikes against military targets on Iran’s Qeshm Island, per ABC News.

The Strait of Hormuz closure threatens to drive energy prices higher and intensify global inflationary pressures, reinforcing expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period.

US ISM Manufacturing PMI climbed to 54 in May 2026, up from 52.7 in the prior two months and beating forecasts to mark the strongest factory expansion since May 2022. April JOLTS data showed Job Openings surging to a nearly two-year high of 7.6118 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of monetary policy.

The Eurozone Harmonized Index of Consumer Prices (HICP) rose 3.2% year-on-year in May, ticking up from the previous 3% and matching market forecasts. This steady inflationary pressure keeps the spotlight firmly on the European Central Bank’s upcoming monetary policy decisions.

The Euro (EUR) could gain ground amid recent hawkish comments from the European Central Bank (ECB) members. ECB policymaker Olli Rehn noted that while long-term inflation expectations remain anchored, a rate move in June should be viewed as a precautionary “insurance hike.” Moreover, fellow ECB member Gediminas Simkus pointed out that inflation expectations currently mirror levels seen four years ago. He strongly emphasized the critical need for the central bank to react in a timely manner to prevent further price pressures from cementing.

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EUR/JPY Price Forecast: Declines below 186.00 amid intervention fears, but bullish vibe prevails

  • EUR/JPY edges lower to near 185.90 in Wednesday’s early European session. 
  • Japan’s Katayama said the authorities are standing ready to respond appropriately to foreign exchange.
  • The positive view for the cross remains intact above the key 100-day EMA, with bullish RSI momentum. 
  • The first upside barrier emerges at 186.10; the initial support level to watch is 185.08. 

The EUR/JPY cross trades in negative territory around 185.90 during the early European trading hours on Wednesday. The Japanese Yen (JPY) gathers strength against the Euro (EUR) as traders are on alert for intervention from Japanese officials. 

Japan’s Finance Minister Satsuki Katayama said on Wednesday that the authorities are ready to act on the foreign exchange if required, adding that she aligns with the Bank of Japan (BoJ) governor on several matters. 

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive bullish bias as price trades above the Bollinger middle band around and comfortably over the 100-day simple moving average (SMA), suggesting the broader uptrend remains intact. The latest Relative Strength Index (RSI) reading at 58.43 sits in positive territory without being overbought, hinting that bullish momentum persists but has not yet reached exhaustion.

On the upside, the immediate resistance level is now aligned with the Bollinger upper band near 186.10, en route to the April 29 high of 187.42. On the other hand, the mid-line around 185.08 reinforcing a nearby demand zone. The next crucial contention level is located near the 100-day SMA at 184.47 and the lower Bollinger band close to 184.07. 

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New Zealand Dollar remains depressed against firmer USD; hawkish RBNZ limits losses

  • NZD/USD attracts some sellers for the second straight day amid a modest USD strength.
  • Geopolitical uncertainties and rising Fed rate hike bets offer some support to the buck.
  • The RBNZ’s abrupt hawkish shift could act as a tailwind for the NZD and help limit losses.

The NZD/USD pair trades with a negative bias for the second straight day, albeit it lacks bearish conviction and holds above the previous day’s swing low. Spot prices currently trade near the 0.5925-0.5920 region, down around 0.15% for the day on the back of a modest US Dollar (USD) strength.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, looks to build on the previous day’s gains amid the uncertainty over US-Iran peace talks and hawkish US Federal Reserve (Fed) expectations. In fact, US President Donald Trump asserted that peace talks were ongoing with Iran, and said that he will have an agreement to extend the ceasefire and reopen the Strait of Hormuz over the next week. Iran, however, warned that it would suspend negotiations following fresh US strikes and an Israeli military operation in Lebanon.

This keeps geopolitical risk premium in play and acts as a tailwind for the safe-haven USD. Meanwhile, renewed tensions in the Middle East continue to fuel concerns over inflation and expectations that the US central bank will raise borrowing costs by the end of this year. According to the CME Group’s FedWatch Tool, traders are assigning over a 50% chance that the Fed will hike interest rates by at least 25 basis points (bps) at the December policy meeting. This turns out to be another factor underpinning the USD and exerting pressure on the NZD/USD pair.

The downside, however, seems limited in the wake of the Reserve Bank of New Zealand’s (RBNZ) abrupt hawkish shift. The central bank’s forecast strongly projects a 25 bps rate increase at the upcoming July 8 meeting and indicated that the OCR could reach roughly 2.85% by the end of this year, implying up to three rate hikes. This might continue to lend some support to the New Zealand Dollar (NZD) and hold back traders from placing aggressive bearish bets around the NZD/USD pair, warranting caution before positioning for any further losses.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.21%0.04%0.21%0.34%0.22%0.80%0.74%
EUR-0.21%-0.17%0.02%0.13%0.01%0.62%0.54%
GBP-0.04%0.17%0.21%0.30%0.17%0.79%0.69%
JPY-0.21%-0.02%-0.21%0.15%0.05%0.60%0.52%
CAD-0.34%-0.13%-0.30%-0.15%-0.13%0.45%0.39%
AUD-0.22%-0.01%-0.17%-0.05%0.13%0.61%0.53%
NZD-0.80%-0.62%-0.79%-0.60%-0.45%-0.61%-0.10%
CHF-0.74%-0.54%-0.69%-0.52%-0.39%-0.53%0.10%

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).

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Swiss Franc remains calm ahead of Trade Balance data

  • USD/CHF stabilizes as the US Dollar gains safe-haven support following reports that Iran halted indirect negotiations with America.
  • The Greenback rose as renewed Middle East tensions fueled inflation fears and expectations of elevated Federal Reserve interest rates.
  • Despite a minor GDP miss, Swiss consumer and industrial activity demonstrated remarkable resilience.

USD/CHF moves little after registering modest gains in the previous day, trading around 0.7870 during the Asian hours on Tuesday. The pair steadies as the US Dollar (USD) remains firm on increased safe-haven demand after Tasnim news agency indicated that Tehran has halted indirect negotiations with the United States. Traders await the Swiss Trade Balance data release due later in the day.

According to the report, Iran and its “Resistance Front” allies, spanning Yemen, Lebanon, and Iraq, have established an agenda to completely block the critical Strait of Hormuz and activate additional fronts, including the Bab el-Mandeb Strait, as a means to punish Israel and its supporters.

The escalation was further compounded by an Axios report on X stating that Iran deployed additional naval mines in the strait last week. These combined developments pose a severe obstacle to a swift resolution of the crisis, which has already effectively shut down the Strait of Hormuz, a vital chokepoint for global oil and liquefied natural gas supplies.

Renewed tensions in the Middle East continue to fuel global inflation concerns and stoke expectations of elevated Federal Reserve (Fed) policy rates. Reflecting these persistent inflationary pressures, financial markets are now pricing in a potential Federal Reserve (Fed) rate hike before the year ends, with the CME FedWatch tool currently indicating a 39% probability of a quarter-point increase in December.

On Monday, recent economic data from Switzerland presented a mixed but generally strong picture of the country’s financial health. On the growth front, Switzerland’s Gross Domestic Product (GDP) expanded by 0.4% quarter-on-quarter in the three months to March, falling slightly short of initial market estimates that had predicted a 0.5% expansion.

Despite the minor GDP miss, consumer and industrial activity showed remarkable resilience. Retail sales in Switzerland surged by 1.6% year-on-year in April 2026, far exceeding market expectations for a modest 0.2% rise and following an upwardly revised 1% gain in the previous month.

Compounding this positive momentum, the country’s industrial sector saw a significant boost as the procure.ch–UBS Manufacturing PMI jumped to 57.3 in May 2026 from 54.5 in April. This reading easily beat the market forecast of 54, marking the highest level of manufacturing expansion Switzerland has seen since July 2022.

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AUD/JPY Price Forecast: Strengthens above 114.00, bullish bias holds above key technical support

  • AUD/JPY gathers strength to near 114.35 in Tuesday’s early European session.
  • The constructive outlook for the cross prevails above the key 100-day EMA, with bullish RSI momentum. 
  • The first upside barrier emerges at 114.75; the initial support level is seen at 113.85. 

The AUD/JPY cross trades in positive territory around 114.35 during the early European session on Tuesday. Traders will closely monitor the developments surrounding the Middle East ceasefire amid mixed signals from US President Donald Trump. 

Trump stated early Tuesday that he believes an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran is reachable “over the next week.” On Monday, US President shrugged off the possible collapse of peace negotiations with Iran, saying, “I don’t care if they’re over, honestly.” 

The likelihood of stronger verbal intervention from Japanese authorities might help limit the Japanese Yen’s (JPY) losses. Finance Minister Satsuki Katayama said on Tuesday the officials stood ready to respond in the currency market as needed and refrained from commenting on recent exchange-rate moves.

The speech by Bank of Japan (BoJ) Governor Kazuo Ueda will be the highlight later on Wednesday. Ueda could offer some hints as to whether the central bank will proceed with a rate increase the following week.

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds a bullish near-term bias as spot remains well above the 100-day simple moving average (SMA) and the Bollinger middle band. Price is pressing the upper side of the recent consolidation, while the Relative Strength Index (RSI) at 57.46 stays in positive territory without yet signaling overbought conditions, suggesting buyers still retain control but with reduced momentum compared to the prior peak.

On the topside, immediate resistance is aligned with the Bollinger upper band at 114.75, and a daily close above this barrier would open the way for a continuation of the broader uptrend. On the downside, initial support emerges at the Bollinger middle band around 113.85, ahead of the lower band at 112.98, with the 100-day SMA at 111.30 acting as a deeper structural floor that would need to give way to materially challenge the prevailing bullish structure.

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Offshore Yuan Remains at Multi-Year High

The offshore yuan strengthened to around 6.76 per dollar on Tuesday, holding near its strongest level since February 2023, as investors increasingly regarded Chinese assets as a relative safe haven amid heightened geopolitical tensions involving Iran. Geopolitical uncertainty persisted after the latest developments indicated that Iran had suspended indirect talks with Washington over Israel’s military operations in Lebanon, even as US President Trump asserted that negotiations remained ongoing. China’s diversified energy supply base and comparatively limited direct exposure to the Middle East have reinforced the attractiveness of its financial markets during the conflict, underpinning the yuan’s resilience. However, further upside in the yuan may be capped by Beijing’s preference for exchange-rate stability, as reflected in the People’s Bank of China’s continued weaker-than-expected daily fixings, as well as potential dollar-buying interventions by major state-owned banks.