USD/CHF strengthens toward 0.7990 as Fed maintains hawkish stance

USD/CHF Edges Higher Amid Fed Policy and Geopolitical Tensions

The USD/CHF currency pair is gaining momentum, approaching the 0.7890 level in early European trading on Monday. The US Dollar (USD) is finding support against the Swiss Franc (CHF) after the US Federal Reserve (Fed) maintained a firm stance, which has bolstered investor confidence in the greenback. Meanwhile, market participants remain attentive to ongoing developments in the Middle East.

Last week, the Fed decided by an 11-1 vote to leave interest rates unchanged within the 3.50% to 3.75% range during its March meeting. This marks the second straight session where the central bank has opted to pause after a series of rate reductions in late 2025.

Rising energy and crude oil prices, fueled by the intensifying conflict between the US, Israel, and Iran, have revived concerns about inflation. As a result, traders have scaled back expectations for imminent Fed rate cuts. According to the CME FedWatch tool, futures markets now reflect an almost 85% probability that the Fed will keep rates steady at its April meeting.

Conversely, escalating turmoil in the Middle East could increase demand for safe-haven assets like the CHF. The Iranian military has threatened to completely close the Strait of Hormuz if US President Donald Trump follows through on his warnings to strike Iranian energy infrastructure. This comes after Trump declared on Sunday that he would “obliterate” Iranian power plants should the strait remain blocked for more than 48 hours.