Global Forex Monitor - March 2026: CHF still bid despite SNB intervention warnings

The war between the US/Israel and Iran, which began on February 28, 2026, has triggered a global supply shock. The threat of closing the Strait of Hormuz has pushed Brent crude up to $84/b and TTF gas to 60 Eur/MWh, creating a stagflationary environment. This has resulted in a resurgence of risk aversion, penalizing both equity and bond markets, and favoring traditional safe-haven assets like gold and the dollar.Even before the war in Iran, the dollar was on the rise, supported by improving US growth and inflation persisting above the Fed's target. The conflict in Iran has accentuated its appreciation, lifting the DXY index above 99 in early March, as the United States is also less dependent on energy from the Middle East. However, this dollar strength could be temporary. Uncertainty over US trade policy, particularly following the invalidation of certain tariffs, will weigh on the currency in the medium term. A 50 bps cut in the Fed Funds rate is still anticipated this year, with a first reduction expected in June and another in September. Furthermore, structural factors such as high public debt, persistent budget deficits, and distrust of US policy should eventually weaken the dollar, despite temporary spikes due to geopolitical crises.EUR/USD, after consolidating around 1.18 in February, retreated sharply below 1.16 in early March under the effect of the war in Iran. Until then, the euro was supported by an improving European economic situation, justifying the ECB's status quo. However, the conflict in the Middle East led to risk aversion, strengthening the dollar and the unwinding of long euro positions, exacerbated by the rise in oil and gas prices. In the short term, the direction of EUR/USD will depend on the duration of the conflict, which is fueling inflationary pressures. The pair is expected to trade between 1.15 and 1.17 in the coming weeks, with a downside risk to 1.14 in case of escalation (Brent at $100/b). In our main scenario