Swiss Franc's Euro Alignment Drives Dollar's 10% Decline

The Swiss franc's alignment with the euro's movements against the dollar during the Asian trading session added significant downward pressure on the U.S. currency. Traders were hesitant to push down the euro/swiss franc exchange rate, leading the Swiss franc to mirror the euro's trajectory against the dollar. This dynamic contributed to a scenario where the Japanese yen, Swiss franc, and euro were all strengthening against the dollar, creating a bearish outlook for the greenback.

The euro/dollar exchange rate reached its highest level since November 2021 on Monday, reflecting the broader market sentiment where multiple currencies were gaining strength against the dollar. The Swiss National Bank's focus on the euro/swiss franc exchange rate rather than the dollar/swiss franc exchange rate suggested that the dollar/swiss franc exchange rate could continue to decline before finding a solid bottom.

Given that most of Europe was still on holiday and would not resume trading until Tuesday, there was limited interest among foreign exchange traders to challenge the Swiss franc's strength. This lack of resistance further contributed to the downward pressure on the dollar, as the Swiss franc's movements were closely tied to the euro's trajectory against the dollar.