Safe-Haven Demand Lifts Yen, Franc Amid Mideast Conflict

Key Takeaways:

*Middle East escalation drives strong JPY and CHF demand as investors seek shelter from geopolitical risk.

*Soft U.S. inflation and Fed rate-cut pricing fuel broader dollar weakness, amplifying haven flows.

Market Summary:

The Japanese yen and Swiss franc extended gains this week, rallying as investors sought shelter from intensifying geopolitical risks and wavering confidence in global trade stability. The yen climbed toward 143.70, while the franc surged to 0.8138 —its strongest level since April—amid growing fears of a wider Middle East conflict and signs of weakening U.S. inflation momentum.

Markets reacted defensively after Israel launched “Operation Rising Lion,” a targeted military campaign against Iranian nuclear and missile infrastructure. Tehran vowed retaliation, prompting U.S. embassy evacuations across Iraq, Bahrain, and Kuwait. The IAEA is reportedly preparing a censure resolution that could pave the way for new UN sanctions, adding to safe-haven demand. These developments overshadowed modest optimism from U.S.–China trade talks, with Beijing pledging to uphold rare earth exports while the U.S. maintained its 55% tariff ceiling.

Trade risks were further highlighted by Trump’s renewed push for unilateral tariff-setting authority by July 9. While the U.S.–China dialogue avoided further escalation—featuring rare earth pledges and a pause on new tariffs—structural tensions linger, capping risk appetite. The euro rallied to a four-year high against the dollar on ECB hawkishness, indirectly supporting CHF.

Rising market volatility has eclipsed monetary policy divergence, fueling safe-haven flows into the Japanese yen and Swiss franc despite contrasting central bank stances. The Bank of Japan remains firmly dovish, projecting no rate hikes before 2026, yet the yen found support from falling U.S. Treasury yields and elevated equity and oil market stress. Meanwhile, the 30-year JGB yield climbed to a record 2.10%, signaling domestic market strain but doing little to offset broader risk aversion. The Swiss franc outperformed both the dollar and euro, buoyed by its role as both a European risk hedge and a traditional store of value, even as the SNB maintains a cautious policy stance.

Looking ahead, markets will focus on Sunday’s Iran nuclear talks in Muscat and the June 18 Fed meeting for fresh macro signals. Firmer U.S. PCE data may temporarily stabilize the dollar, but any escalation in regional tensions or trade fallout could extend haven flows into JPY and CHF.

Technical Analysis 

GBPJPY, H4

The GBPJPY pair has faced strong rejection at the 196.20 resistance level on three separate occasions, forming a clear triple-top pattern—a classic bearish reversal signal. This technical development gains further significance as the pair has now broken decisively below its upward trendline support, reinforcing the shift to a negative bias in the market.

The momentum indicators paint an equally concerning picture for bulls. The Relative Strength Index (RSI) has dipped close to oversold territory, reflecting growing selling pressure, while the Moving Average Convergence Divergence (MACD) is on the verge of crossing below the zero line. These technical signals collectively point to strengthening downward momentum that could potentially drive the pair to fresh lows in the near term.

With the triple-top pattern now confirmed and the breakdown from trendline support, the technical setup suggests limited buying interest at current levels. Should the pair fail to find support, traders may anticipate an extension of the current downtrend, with the next key support levels likely to come into focus. 

Resistance levels:196.00, 197.60

Support levels: 191.90, 189.95

USDCHF, H4

The USDCHF pair continues its downward trajectory, approaching its lowest level since April near the 0.8050 support level. The pair’s inability to sustain above the 0.8161 double-bottom support level proved significant, as the lack of bullish momentum ultimately led to a breakdown below this key threshold. Since breaching this level, USDCHF has declined by over 1%, reflecting accelerating selling pressure.

Technical indicators underscore the growing bearish dominance. The Relative Strength Index (RSI) has entered oversold territory, while the Moving Average Convergence Divergence (MACD) shows bearish divergence below the zero line, both signaling strengthening downward momentum. This technical configuration suggests the pair may be vulnerable to further losses, potentially testing new multi-month lows in the near term.

The failed double-bottom pattern at 0.8161 and subsequent breakdown have shifted the technical bias firmly to the downside. With momentum indicators supporting continued weakness and no immediate signs of stabilization, traders should monitor the 0.8050 level closely. A decisive break below this support could open the door for additional downside, while any potential recovery would first need to reclaim the 0.8161 level to suggest trend exhaustion.

Resistance levels: 0.8220, 0.8410

Support levels: 0.8035, 0.7876