Swiss Franc hits a ten-month low as hawkish Fed bets lift the US Dollar

• USD/CHF extends its rally for a sixth consecutive day as Fed rate-hike expectations underpin the US Dollar.
• Traders await the US PCE report due on Thursday for fresh clues on the Fed's policy path.
• Uncertainty over a final US-Iran agreement continues to provide support for the safe-haven Greenback.

The Swiss Franc (CHF) slides to its weakest level in more than ten months on Wednesday as hawkish Federal Reserve (Fed) outlook boosts the US Dollar (USD). At the time of writing, USD/CHF trades around 0.8126, extending its gains for a sixth consecutive day.

The US Dollar continues to edge higher, climbing to its highest level since May 2025. Renewed demand for the Greenback comes after the Federal Reserve delivered a hawkish hold at last week's policy meeting, where a majority of policymakers signaled that a rate hike later this year may be needed to contain inflationary pressure driven by higher energy costs.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 101.36, near its highest level in over a year, since May 2025.

US Consumer Price Index (CPI) accelerated to 4.2% in May, more than double the Fed's 2% target. Attention now turns to the Personal Consumption Expenditures (PCE) Price Index report due on Thursday. Economists expect the core PCE Price Index, the Fed's preferred inflation gauge, to rise to 3.4% YoY in May from 3.3% in April.

A stronger-than-expected reading could reinforce expectations that the Fed could raise interest rates in September, with markets currently pricing in roughly a 70% probability of a rate hike, according to the CME FedWatch tool.

Meanwhile, attention also remains on the ongoing US-Iran talks. US President Donald Trump said Iran had agreed to nuclear inspections, but Tehran denied that any such commitments were made during the latest round of talks.

Until a final deal is reached, geopolitical risks are likely to remain in play, lending additional support to the safe-haven US Dollar.