The USD/CHF pair has moved upward to approximately 0.7890 during the early European session on Monday. The Federal Reserve’s hawkish stance bolsters the strength of the US Dollar. Iran has issued a warning that it will fully shut down the Strait of Hormuz in response to any US airstrikes on power plants. The USD/CHF pair shows resilience, approaching 0.7890 in the early European session on Monday. A hawkish hold from the US Federal Reserve lends support to the US Dollar in its performance against the Swiss Franc.
Market participants will pay close attention to developments in the Middle East. The Federal Reserve made a decisive move, with an 11-1 vote to maintain interest rates in the target range of 3.50% to 3.75% during its March meeting last week. This represents the second consecutive gathering in which the US central bank has maintained its interest rates, following a series of reductions in late 2025. Rising crude oil and energy prices, fueled by the intensifying US-Israeli conflict with Iran, rekindle concerns about inflation and lead traders to reassess their expectations for Federal Reserve rate cuts. According to the CME FedWatch tool, futures traders are anticipating a nearly 85% likelihood of no rate cuts during the April Fed policy meeting.
Conversely, increased tensions in the Middle East may elevate the appeal of a safe-haven currency like the CHF. The Iranian military has announced its intention to fully close the Strait of Hormuz should US President Donald Trump follow through on his threats to strike Iranian energy installations. This announcement follows Trump’s warning on Sunday that he would “obliterate” Iranian power plants if the Strait of Hormuz was not reopened within 48 hours.