The US Dollar Weakens as risk sentiment improves, and USD/CHF is near key breakdown.

The US dollar remains under pressure as improving risk sentiment and easing uncertainty around the Middle East conflict support global equities and weaken demand for safe-haven flows. Technically, the US Dollar Index has slipped below its 200-day EMA and is now testing support near 97.40, suggesting recent rebounds may only be corrective, with downside risks still dominant unless the index pushes toward 98.95 resistance first.

Correlations across major FX pairs remain very strong, confirming that the USD direction is still the main driver of market movement. AUD/USD and NZD/USD show the strongest recent inverse correlation with the dollar, while EUR/USD, GBP/USD, and NZD/USD are also closely tracking USD flows. Gold and oil correlations with the dollar have softened slightly, signalling a fading geopolitical risk premium. The Japanese yen stands out as less tightly correlated, likely due to yield expectations and Bank of Japan policy factors.

Among major currencies, the Canadian dollar has been the strongest recently, with USD/CAD falling consistently. NZD/USD is forming a potential base after stronger inflation data, while AUD/USD and EUR/USD look extended and choppy near highs. GBP/USD appears slightly more stable on pullbacks. Overall, USD/CHF currently offers the clearest bearish setup against the dollar.

Technically, USD/CHF remains in a downtrend after failing above 0.80. Bears may look for rallies toward 0.7850 as selling opportunities, with downside targets near 0.7750, followed by 0.7700 if broader USD weakness continues.

USD/CHF Daily Chart