USD Weakens as Iran Peace Talks Stall, SNB Signals Negative Rates

The US dollar faced headwinds during Tuesday's session as geopolitical uncertainty surrounding US-Iran negotiations weighed on market sentiment. Washington initiated outreach with Tehran, but talks have not progressed to formal negotiations, with a US-led group awaiting Iran's response for peace talks scheduled Thursday. On the economic front, the US Richmond Fed composite index came in flat at 0, significantly above the expected -10, offering a bright spot. However, the March S&P Global flash services PMI disappointed at 51.1 versus the 51.5 consensus, suggesting a slight cooling in the services sector. Meanwhile, SNB Chairman indicated readiness to reintroduce negative rates if necessary, though emphasized the threshold remains high, putting pressure on USD/CHF. The mixed US data and unresolved geopolitical tensions create a challenging environment for dollar bulls. Traders should monitor Thursday's Iran response deadline as a potential volatility catalyst. Near-term, safe-haven flows into JPY and CHF may persist if negotiations fail to materialize, while risk assets remain vulnerable to headline-driven swings.