The US Dollar (USD) extended its gains across major currency pairs on Thursday, driven by persistent geopolitical tensions in the Middle East and uncertainty surrounding US-Iran negotiations [1][3]. USD/CHF traded around 0.7941, marking its third consecutive day of gains and challenging the 200-day Simple Moving Average (SMA) at 0.7946, a key resistance level. Technical indicators such as the Relative Strength Index (RSI) at 62 and the MACD in positive territory reinforced a measured bullish tone, with potential upside targets at 0.8000 and 0.8050 if resistance is breached [1]. The Swiss Franc (CHF) struggled as traders remained cautious about possible intervention from the Swiss National Bank [1].
USD/JPY also rose, trading near 159.70, supported by US President Donald Trump's comments regarding the economic impact of Middle East tensions. Trump asserted that the spike in oil prices and stock market decline were less severe than anticipated and expressed confidence in the war effort, suggesting any economic damage would eventually be reversed [2]. Technical analysis showed USD/JPY consolidating above key moving averages, with buyers retaining control and immediate support at 159.44 and 159.28. A break above 159.70 could extend the bullish momentum [2].
USD/CAD advanced to 1.3848, its highest level since January 20, as the Canadian Dollar (CAD) remained under pressure amid rising geopolitical risks. Iran rejected a US-proposed 15-point plan to end the conflict, demanding security guarantees and recognition of its control over the Strait of Hormuz. The Iranian Army warned that any ground incursion would be "more dangerous and costly" for the US, while Trump claimed Iranian negotiators were "begging" for a deal but warned time was running out for a diplomatic resolution [3]. Oil prices stayed volatile and elevated, raising inflation expectations and complicating monetary policy for both the Federal Reserve (Fed) and the Bank of Canada (BoC). Markets expect the Fed to keep rates unchanged through 2026 at 3.50%-3.75%, with a 40% probability of a hike to 3.75%-4.00% by October. Money markets anticipate around 75 basis points of rate hikes by the BoC by year-end 2026 [3].
Across all three pairs, the US Dollar was the strongest against the Australian Dollar, with percentage changes against major currencies ranging from 0.15% to 0.68% depending on the pair and timeframe [1][3]. The ongoing geopolitical tensions and hardline stances from both the US and Iran have increased the risk of a prolonged conflict, raising concerns about broader economic spillover effects and influencing central bank policy expectations [3].
CONCLUSION
The US Dollar's broad-based strength is underpinned by heightened geopolitical risks and stalled US-Iran negotiations, with technical and fundamental factors supporting bullish momentum across USDCHF, USDJPY, and USDCAD. Elevated oil prices and shifting rate expectations for the Fed and BoC signal potential for further volatility and market impact. Investors remain focused on developments in the Middle East and central bank responses to inflation pressures.