USD/CHF trades on the back foot on Friday and is set for a second straight weekly decline amid broad-based weakness in the US Dollar (USD).
At the time of writing, the pair is trading around 0.7773, hovering near two-month lows
Price action continues to be driven by geopolitical headlines surrounding the Middle East war, with markets remaining cautiously optimistic that the US and Iran could reach a deal soon. Secretary of State Marco Rubio said on Friday that the United States expects a response from Tehran on its latest peace proposal later in the day. Improving sentiment around a possible US-Iran agreement is weighing on the Greenback, which has slipped back toward pre-war levels.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 97.94, down roughly 0.34% on the day. However, tensions remain elevated, limiting further downside in the pair after fresh reports of clashes between US and Iranian forces near the Strait of Hormuz. In the meantime, traders also digested the latest US employment report, which supports expectations that the Federal Reserve (Fed) could remain patient before cutting interest rates as inflation risks tied to higher energy prices remain elevated.