On Monday, major currency pairs including USD/CHF, GBP/USD, and EUR/USD exhibited notable movements as reports emerged of ongoing US-Iran ceasefire talks, with regional mediators involved in discussions for a potential 45-day ceasefire. According to Bloomberg, citing Axios, unnamed sources indicated that the likelihood of reaching a deal within the next 48 hours remains low [1][2][3]. US President Donald Trump has set a new deadline for Iran to reopen the Strait of Hormuz, extending it by 20 hours to Tuesday at 8:00 pm EST (00:00 GMT on Wednesday), and has threatened to target Iranian power plants and bridges if demands are not met [1][2][3]. Iranian officials responded with warnings of reciprocal retaliation and insisted the strait would remain closed until compensation for war-related damages is secured [1].
The USD/CHF pair extended its winning streak for the third consecutive day, trading around 0.8010 during Asian hours, supported by increased safe-haven demand amid heightened uncertainty in the Middle East [1]. However, the Greenback's upside may be capped by the ongoing ceasefire negotiations. Surging energy prices have fueled speculation that the Federal Reserve may postpone rate cuts or even raise borrowing costs later this year if inflationary pressures persist, with market participants awaiting the latest FOMC Meeting Minutes for clearer guidance [1]. Swiss inflation rose to 0.3% year-over-year in March, the highest in a year but still near the lower bound of the Swiss National Bank's 0–2% target, easing pressure for policy adjustments [1].
GBP/USD attracted dip-buyers near 1.3175 during the Asian session, snapping a two-day losing streak and climbing above 1.3200. Despite this, the pair remains below key technical resistance levels, with a mildly bearish bias persisting due to ongoing geopolitical risks and technical indicators such as the MACD and RSI showing a lack of sustained buying pressure [2]. The risk of further escalation remains, and any meaningful appreciation is likely to face resistance at 1.3240 and 1.3300, while immediate support lies at 1.3190 [2].
EUR/USD posted modest gains near 1.1520 during the early European session, buoyed by optimism surrounding the ceasefire talks. Economists, including ING's James Knightley, warned that a prolonged conflict in the Middle East could pose downside risks to the US labor market, as heightened geopolitical and economic uncertainty may discourage business hiring [3]. Hawkish comments from European Central Bank policymakers, including President Christine Lagarde, reinforced the ECB's commitment to maintaining restrictive policy until inflation sustainably returns to the 2% target, potentially supporting the Euro [3].
CONCLUSION
Currency markets responded to the US-Iran ceasefire negotiations with moderate volatility, as safe-haven demand and geopolitical uncertainty influenced USD/CHF, GBP/USD, and EUR/USD. While optimism about a ceasefire provided some support to the Euro and Pound, persistent risks and technical resistance limited upside momentum. Market participants remain focused on upcoming central bank guidance and developments in the Middle East for further direction.