• USD/CHF trades around 0.7815 on Wednesday, up 0.04% on the day but still close to a 1-month low.
• Optimism about a possible de-escalation between the United States and Iran weighs on demand for the US Dollar.
• Softer-than-expected US inflation data strengthens the case for a more accommodative Fed policy.

USD/CHF trades around 0.7820 on Wednesday at the time of writing, up 0.04% on the day, but the pair remains close to a 1-month low at 0.7790 reached on Tuesday. The US Dollar (USD) struggles to recover against its major peers as growing optimism over a potential geopolitical de-escalation between the United States (US) and Iran weighs on the currency.

The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, stabilizes near 98.20 after recently touching an almost seven-week low around 98.00. Markets are reacting to comments from US President Donald Trump, who said in an interview with Fox Business that the conflict with Iran could be close to ending. Trump also told The New York Post that negotiations could resume in Pakistan within the next few days.

US Vice President JD Vance also mentioned progress in discussions, stating that talks between the two countries continue through several diplomatic channels, including Pakistan. These prospects of renewed dialogue are improving risk sentiment in financial markets and reducing demand for traditional safe-haven assets.

At the same time, the latest inflation data from the United States has weighed on the US currency. The Producer Price Index (PPI) rose by 0.5% MoM in March, well below market expectations of 1.2%, while the core measure increased by just 0.1%. On an annual basis, producer inflation reached 4%, also below the 4.6% forecast, reinforcing the view that inflationary pressures may be easing.

In this environment, markets have gradually reduced expectations of interest rate hikes by the Federal Reserve (Fed) this year, instead favoring the prospect of a more accommodative monetary policy stance. This reassessment of the rate outlook continues to keep the US Dollar under pressure against the Swiss Franc (CHF).