The US Dollar (USD) experienced broad-based weakness on Friday, trading lower against major currencies including the Swiss Franc (CHF) and Australian Dollar (AUD), as investors focused on ongoing geopolitical tensions in the Middle East and awaited key US inflation data. The USD/CHF pair was 0.26% lower at around 0.8048, with the Swiss Franc giving back some early gains but remaining higher against most peers except the Japanese Yen (JPY) amid a cautious market mood [1]. The US Dollar Index (DXY) was down 0.14% near 100.80 after hitting a three-week low of 100.60 earlier in the day [1].
Geopolitical developments continued to influence currency markets. Both sources reported ongoing technical talks between the US and Iran regarding Tehran's nuclear program and the Strait of Hormuz, despite US President Donald Trump declaring the collapse of the memorandum of understanding (MoU) [1][2]. According to [2], the US military launched new strikes against Iran earlier in the week in response to attacks on commercial ships, with Iran retaliating by targeting US allies and military installations in Bahrain and Kuwait. These events have heightened fears of energy supply disruptions, which could further fuel US inflationary pressures [1][2].
Market participants are closely watching the upcoming US Consumer Price Index (CPI) data for June, scheduled for release on Tuesday. The core CPI is expected to show a steady year-on-year growth of 2.9% [1]. Meanwhile, the Australian Dollar climbed to a two-and-a-half-week high around 0.6970 before retreating slightly, still up 0.10% for the day, supported by a less hawkish tone from the latest FOMC Minutes and hopes for diplomatic progress in the Middle East [2]. However, prospects for at least one interest rate hike by the US Federal Reserve in 2026 and hawkish rhetoric from the Reserve Bank of Australia (RBA) are also influencing market sentiment. RBA Assistant Governor Sarah Hunter warned that persistent high energy prices due to the Iran conflict could necessitate further monetary tightening to bring inflation back to target [2].
A heat map of currency movements showed the US Dollar was weakest against the Japanese Yen (-0.47%) and Swiss Franc (-0.22%) and strongest against the Canadian Dollar (-0.04%) on the day [2].
CONCLUSION
The US Dollar remains under pressure amid geopolitical risks and anticipation of US inflation data, with both the Swiss Franc and Australian Dollar benefiting from the cautious market environment. Ongoing tensions in the Middle East and central bank policy outlooks are likely to drive further volatility in currency markets in the near term.