USD/CHF fell for a second day, trading near 0.7790 on Wednesday and down 0.50%. The US Dollar stayed under pressure as market conditions shifted towards higher risk-taking.
The move followed reports of progress towards a possible US–Iran understanding. Axios said the two sides are closer to a memorandum of understanding that could set a framework for future nuclear talks, reducing demand for US Dollar safe-haven flows.
Middle East Headlines Shape Risk Mood
US Defence Secretary Pete Hegseth said a ceasefire from nearly a month ago remains in place, while Secretary of State Marco Rubio said US offensive operations have ended. President Donald Trump announced a temporary pause in operations to escort vessels through the Strait of Hormuz while assessing the chance of a deal.
Trump also said that if Iran does not agree to a deal, bombing would resume “at a much higher level”. This limited the improvement in market mood.
In US data, ADP reported 109K private-sector jobs added in April, above expectations of 99K. Despite this, the Dollar remained weak as risk appetite improved.
Swiss inflation rose to 0.6% year-on-year in April from 0.3% in March, above the SNB projection of 0.5%. Higher energy costs linked to Middle East tensions were a main factor.
Risk Appetite Pressures The Dollar
The improving risk appetite we are seeing is putting pressure on the US Dollar. Recent high-level talks between Washington and Beijing aimed at de-escalating trade disputes are making traders move away from safe-haven assets. This has been the primary driver of market sentiment this week.
Given this backdrop, we are watching for a potential decline in implied volatility on major currency pairs as tensions ease. While the news is positive, statements from officials can easily reverse the mood, making selling volatility through strategies like short straddles risky. Buying put options on USD/CHF could be a simpler way to position for further dollar weakness.
On the other side of the pair, the Swiss Franc is showing underlying strength. The latest inflation figures for April 2026 came in at 1.4%, slightly ahead of the Swiss National Bank’s forecasts and well above the 0.6% rate we saw this time last year. This reduces the chance of SNB intervention to weaken the franc, adding to the downward pressure on USD/CHF.
We’ve noticed the market is largely ignoring solid US data, similar to what we saw during the US-Iran de-escalation talks back in 2025. For instance, last Friday’s US jobs report showed a healthy 195,000 jobs were added in April, but this failed to provide any support for the dollar. This focus on geopolitics over fundamentals suggests that traders should prioritize headline risk.
Traders should therefore consider buying short-dated USD/CHF put options with strike prices below the current support levels. The environment suggests a potential break of recent lows, and options provide a defined-risk way to capitalize on this. A two-week to one-month tenor seems appropriate to capture the next move if positive risk sentiment holds.
