Swiss Franc weakens as fading US-Iran deal hopes lift US Dollar

USD/CHF trades higher as fading optimism over a US-Iran deal supports the Greenback.
Elevated Oil prices strengthen expectations that the Fed may need to keep interest rates higher for longer.
Switzerland’s economy grew faster than expected in the first quarter, while manufacturing activity also improved.

Vishal Chaturvedi FXStreet

USD/CHF edges higher on Monday as fading hopes for a near-term US-Iran peace deal underpin the US Dollar (USD) and keep the Swiss Franc (CHF) under pressure despite stronger-than-expected Swiss Gross Domestic Product (GDP) figures. At the time of writing, USD/CHF is trading around 0.7878, up nearly 0.88% on the day.

Iran’s semi-official Tasnim News Agency reported that Tehran has suspended message exchanges with Washington over Israel’s military operations in Lebanon. The report comes as Israel expands its military offensive against Hezbollah in southern Lebanon.

Meanwhile, the United States and Iran exchanged fresh attacks over the weekend. The latest developments helped the US Dollar rebound after it came under pressure last week amid reports that Washington and Tehran had reached a preliminary 60-day memorandum of understanding (MOU).

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.33 after recovering from Friday’s two-week low near 98.75.

Oil prices also staged a sharp rebound and continue to stoke inflation concerns. West Texas Intermediate (WTI) Crude Oil is up more than 5% on Monday.

Higher energy costs are fueling expectations that the Federal Reserve (Fed) may need to raise interest rates to tackle inflation, pushing US Treasury yields higher.

In contrast, the Swiss National Bank (SNB) is expected to keep policy unchanged as Swiss inflation remains within the central bank’s 0–2% target range. Switzerland’s annual CPI, due on Thursday, is forecast to rise to 0.8% in May from 0.6% in April.

On the data front, the S&P Global US Manufacturing Purchasing Managers Index (PMI) rose to 55.1 in May from 54.5 in April, while the ISM Manufacturing PMI climbed to 54, marking its highest reading since May 2022.

Switzerland’s economy expanded by 0.7% QoQ in Q1, beating forecasts of 0.5% after growing 0.2% in the previous quarter. The SVME Manufacturing PMI rose to 57.3 in May from 54.5 in April.

SNB FAQs

What is the Swiss National Bank?

The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.

How does the Swiss National Bank interest-rate policy affect the Swiss Franc?

The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.

Does the Swiss National Bank intervene in the forex market?

Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.

When does the Swiss National Bank Governing Council decide on monetary policy?

The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.

Author

Vishal Chaturvedi

FXStreet

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

$4,275: Gold skating on thin ice as eyes remain on Mideast conflict, Fed

Gold is briefly regaining $4,300 early Tuesday, looking to build on a tepid recovery from six-week troughs near $4,250. Traders are monitoring the widening conflict in the Middle East ahead of the two-day US Federal Reserve monetary policy meeting later in the day.

Bitcoin remains volatile amid CLARITY Act vote – Zcash, Stellar rally

Bitcoin holds steady around $78,000 on Tuesday, sustaining its roughly 2% recovery from the previous day. Broader cryptocurrency market volatility remains elevated ahead of the scheduled CLARITY Act cloture vote on Tuesday. Zcash and Stellar retain bullish momentum, emerging as the top performers over the last 24 hours.

Hard assets are entering their next explosive phase – Are you positioned?

It’s official: Commodities and Hard Assets have become the best-performing asset class of 2026. In a year defined by persistent inflation, geopolitical conflict, rising sovereign debt and intensifying supply disruption, capital is rotating aggressively into the one area governments cannot print and central banks cannot manufacture: scarce physical assets.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.