USD/CHF fell on Friday as the Swiss Franc rose and the US Dollar weakened. The pair traded near 0.7800, down 0.46% on the day, and was set for a second weekly drop.
Sentiment improved after Iran said the Strait of Hormuz was open during a ceasefire period. The statement said passage for commercial vessels was “completely open” on a co-ordinated route.
US President Donald Trump announced a 10-day ceasefire between Israel and Lebanon on Thursday. Trump also said a US naval blockade would stay “in full force and effect” against Iran until a final agreement is completed.
Oil prices dropped after the announcement, with WTI falling nearly 10% soon after. The US Dollar Index slid to its lowest level since 27 February, then rebounded, and traded near 98.00 after touching about 97.63.
Lower oil eased inflation concerns and pushed US Treasury yields down. CME FedWatch showed markets leaning towards a Fed rate cut by December, versus hold probabilities of about 70% the prior day.
San Francisco Fed President Mary Daly said rates could stay unchanged, but could rise if inflation returns. Another round of US-Iran talks is expected this weekend.
Looking back at the events of 2025, we saw how geopolitical de-escalation can sharply impact markets. The reopening of the Strait of Hormuz triggered a significant drop in oil prices, which in turn weakened the US Dollar. Consequently, USD/CHF tumbled to levels around 0.7800 as risk appetite improved and Fed rate cut expectations surged.
The situation today in April 2026 presents a starkly different picture, creating a key divergence. The US Dollar Index is firm, recently trading above 105, unlike the sub-98 levels we saw during the 2025 de-escalation. This strength is partly fueled by the Federal Reserve’s current “higher-for-longer” stance as inflation remains persistent.
We see WTI crude oil currently stabilized near $85 a barrel, a far cry from the sub-$70 prices seen after the 2025 announcement. This suggests that any new geopolitical flare-ups in the Middle East could cause a rapid spike, making long volatility plays through options attractive. Traders should be positioned for sudden shifts in energy prices, as history shows they can change dramatically on a single headline.
With USD/CHF currently trading near 0.9150, the memory of its rapid fall in 2025 highlights its sensitivity to broad US Dollar sentiment. We believe the current elevated level presents an opportunity for traders to consider downside protection or speculative bearish positions. Purchasing put options on USD/CHF could be a cost-effective way to gain exposure to a potential drop if risk sentiment suddenly improves or the Fed signals a pivot.
The most critical lesson from 2025 was how quickly Fed rate expectations can reverse. While the CME FedWatch Tool now shows a very low probability of rate cuts in the next six months, any sign of easing geopolitical tensions or a sharp economic downturn could rapidly change that outlook. We should therefore monitor Fed speakers closely and consider using interest rate futures to position for a potential dovish shift.
