The Swiss Franc strengthens as traders react to a US-Iran framework agreement, pressuring the USD/CHF pair ahead of the Fed’s rate decision.
The USD/CHF pair dropped to near 0.7930, its lowest level since June 5, in early European trading on Monday. The decline follows a US-Iran announcement of a framework peace deal, lifting demand for the Swiss Franc as a safe-haven asset.
Traders are also focusing on the US Federal Reserve’s upcoming interest rate decision on Wednesday, where rates are expected to remain unchanged at 3.50%-3.75%. Market sentiment has shifted slightly, with the probability of a December rate hike falling to 64% from 69% last week, per the CME FedWatch tool.
The peace deal, set to be signed Friday in Switzerland, includes the lifting of a US naval blockade and a ceasefire across multiple fronts. Any hawkish signals from Fed officials during Wednesday’s press conference could reverse the Greenback’s recent weakness.