USD/CHF rose 0.13% to near 0.7830 in the Asian session on Monday as the US Dollar strengthened. The US Dollar Index (DXY) was up 0.1% at about 98.30.
Iran said it would not attend a second round of talks with the United States, according to the Islamic Republic News Agency (IRNA). IRNA cited “excessive demands, unrealistic expectations, constant shifts in stance, repeated contradictions, and the ongoing naval blockade”.
Earlier, US President Donald Trump said Iran had breached ceasefire terms in a Truth Social post. He said Iran fired at a French ship and a freighter from the United Kingdom.
Markets are also waiting for US Retail Sales data for March, due on Tuesday. Retail Sales are forecast to rise 1.3% month-on-month, up from 0.6% previously.
We remember looking back to 2025 when Mideast tensions pushed USD/CHF up towards 0.7830. The US Dollar became the preferred safe haven then, even over the Swiss Franc. That period showed us how geopolitical flare-ups can quickly shift currency dynamics away from fundamentals.
Today, the situation is driven more by central bank policy divergence, with the pair trading much higher around 0.9150. The Swiss National Bank surprised markets with a rate cut last month to 1.25%, while the Federal Reserve is holding steady as US inflation hovers at a persistent 2.8%. This difference in policy is creating a strong underlying bid for the US Dollar against the Franc.
For traders, this points towards strategies that can benefit from continued upward momentum and heightened uncertainty. One-month implied volatility on USD/CHF options has climbed to 9.5%, reflecting market nervousness about potential central bank surprises and global risks. Buying call options or setting up bull call spreads could be a way to capture further upside while defining risk.
We also see value in using options to hedge against any sudden reversal, should upcoming US inflation data show an unexpected cooling. The next US CPI release is critical and could cause a sharp move if it misses expectations. Therefore, purchasing some out-of-the-money put options could offer cheap protection against a dollar downturn in the coming weeks.
