USD/CHF fell for a fourth straight session, trading around 0.7820 in Asian hours on Monday, as the US Dollar weakened on reduced safe-haven demand amid growing optimism over a potential US-Iran agreement. An Axios report, citing a US official, said the two countries are close to a deal featuring a 60-day ceasefire extension. The proposal would reopen the Strait of Hormuz, with Iran clearing mines and allowing ships to pass freely, while the US would lift its blockade on Iranian ports.
The Dollar’s decline was tempered by firmer inflation concerns that have nudged Federal Reserve expectations towards further tightening. Markets are pricing a 45.1% probability of a 25 basis point Fed rate rise by year-end, according to CME FedWatch. Policy uncertainty also persisted after Governor Christopher Waller indicated he no longer supports retaining an easing bias in the Fed’s official statement, while Swiss National Bank Vice Chairman Martin Schlegel said the SNB remains willing to intervene in FX markets if needed and that Swiss inflation is still within its price stability range.
Downtrend Outlook And Trading Strategies
We believe the downtrend in USD/CHF has room to run in the coming weeks. The potential US-Iran agreement is a significant de-risking event, which has already helped push WTI crude futures from over $85 a barrel to around $79. This eases immediate inflation fears and reduces the US dollar’s appeal as a safe haven.
Given this outlook, we are looking at buying put options on USD/CHF with strike prices around 0.7750 and 0.7700. This strategy allows us to profit from further downside while capping our maximum loss. The pair has broken key support levels, and historical precedent from past de-escalations suggests a move toward 0.7700 is plausible.
Risks: Federal Reserve Policy And SNB Intervention
However, we must remain cautious about the Federal Reserve’s stance. The latest US CPI data for April 2026 came in hotter than expected at 3.6%, which supports Governor Waller’s hawkish comments. This persistent inflation could cause the dollar to rebound if the market begins to more seriously price in a Fed rate hike later this year.
On the other side of the trade, the Swiss National Bank remains a key variable. With Swiss inflation comfortably at 1.5%, well within their 0-2% target range, the SNB has little domestic pressure to tighten policy. We are mindful that if the franc strengthens too quickly, the SNB could verbally intervene or sell francs in the open market to weaken its currency.
