The US Dollar (USD) strengthened against major currencies on Friday, driven by a combination of hawkish signals from the Federal Reserve (Fed) and heightened geopolitical uncertainty following the collapse of planned US-Iran talks in Switzerland. The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to keep its benchmark interest rate steady at 3.5%–3.75% during Chairman Kevin Warsh's first meeting, with Warsh emphasizing that 'price stability' would be the Fed’s guiding principle [2][3]. Nearly half of Fed officials signaled that at least one rate hike could be required later this year, and futures traders have priced in a likely 25 basis point increase at the September meeting, with some chance of an earlier move [2][3].
Geopolitical developments added to market volatility. US Vice President JD Vance canceled his planned trip to Switzerland for talks with Iranian negotiators, which were intended to implement a 14-point agreement between Tehran and Washington to end their war [1][2][3]. The Swiss Foreign Ministry confirmed that the meetings at Bürgenstock would not take place as scheduled, and Iranian media cited ongoing Israeli attacks in southern Lebanon as the reason for postponing the Iranian delegation's travel [1][3]. A spokesperson for Vice President Vance noted that the logistics of these negotiations 'have never been simple or predictable,' and no departure is imminent until a concrete update is established [3].
In currency markets, the EUR/USD pair traded in negative territory around 1.1425, weakening below 1.1450 amid oversold RSI momentum and persistent downside pressure [1]. Technical analysis indicates that the pair remains below key moving averages, with the first support at the March 13 low of 1.1411 and further downside possible toward the April 23, 2025 low of 1.1308 [1]. The USD/CHF pair advanced to around 0.8075, the highest since December 10, 2025, as the Swiss Franc weakened on increased US rate hike bets and the Swiss National Bank (SNB) left its main policy rate unchanged at 0% [2]. The SNB reiterated its readiness to intervene in foreign exchange markets if necessary [2].
The USD/INR pair gained ground as the US Dollar rose on the Fed’s hawkish outlook, though the Indian Rupee (INR) found support from robust Foreign Currency Non-Resident Bank (FCNR-B) inflows and aggressive dollar selling by exporters, prompting intermittent intervention by the Reserve Bank of India (RBI) [3]. Oil prices eased due to reports of an initial US-Iran agreement and the lifting of the US military blockade on Iranian ports, which is expected to support emerging market currencies, though a full recovery in global shipping and energy volumes may take months [3].
According to [3], media reports indicated that the US and Iran have signed an initial agreement, initiating a 60-day negotiation window for a permanent peace deal, and the US military has lifted its blockade on Iranian ports. However, [1] and [2] report that the talks have been postponed or canceled, highlighting a discrepancy in the status of the US-Iran negotiations.
CONCLUSION
The US Dollar strengthened broadly on Friday, supported by the Fed’s hawkish policy outlook and uncertainty following the collapse of US-Iran talks. Major currency pairs such as EUR/USD and USD/CHF reflected this shift, while the Indian Rupee was buoyed by local inflows and easing oil prices. Markets remain cautious amid conflicting reports on US-Iran diplomatic progress and ongoing geopolitical risks.