Swiss Franc weakens as US Dollar rises on safe-haven demand

USD/CHF gains ground for the second successive day, trading around 0.8100 during the Asian hours on Monday. The pair appreciates as the US Dollar rises on increased safe-haven demand amid heightened geopolitical tensions in the Middle East. According to Bloomberg, the US Central Command (CENTCOM) launched additional strikes on Sunday evening, aimed at weakening Iran's capability to target civilian vessels navigating the waterway.

Reuters reported that US forces have hit more than 300 Iranian targets over a three-night span, including 140 on Saturday alone, while Washington and Tehran issued conflicting declarations regarding whether the strait remains open to maritime traffic.

Additionally, the US Dollar receives support from escalating US-Iran missile strikes, which pushed oil higher and sparked fears of inflation and higher Federal Reserve (Fed) interest rates. The US Consumer Price Index (CPI) inflation data will be eyed on Tuesday for further clues on the Federal Reserve's (Fed) policy outlook. The headline CPI is expected to decline by 0.1% MoM in June, while the core CPI is projected to show a rise of 0.3% during the same period.

Traders expect the Fed to deliver one more interest-rate increase before the year concludes. Meanwhile, all eyes will be on Fed Chair Kevin Warsh as he makes his first official appearance before the US Congress this Tuesday.

Switzerland’s consumer confidence index dropped to -36 in June 2026, down from -32 in June 2025 and slightly worse than the market forecast of -35. With domestic sentiment deeply negative and Swiss inflation remaining highly contained, flatlining month-on-month at just 0.5% annually in June, the Swiss National Bank (SNB) faces zero pressure to raise interest rates. If anything, weak data keeps the door wide open for the SNB to cut interest rates or intervene in the foreign exchange market to intentionally weaken the franc. This makes the CHF less attractive to yield-seeking investors.