US-Iran Ceasefire Optimism Erases Federal Reserve Rate Hike Expectations

The USD/CHF pair is trading near its monthly low of 0.7790. The pair faces selling pressure as the US Dollar Index (DXY) drops toward its seven-week low of 98.00. This weakness stems from a shift in market pricing for Federal Reserve interest rate hikes. Traders are no longer pricing in any rate hikes this year, a reversal from the two hikes projected in March. Inflation expectations have de-anchored due to optimism that the United States and Iran could reach a permanent ceasefire. US President Donald Trump stated in an interview with Fox Business that the war with Iran is close to over and told The New York Post that negotiations could resume in Pakistan within two days. Vice President JD Vance confirmed that talks are taking place via channels including Pakistan as both sides work toward a deal.