Swiss Franc regains traction as USD eases from intraday highs amid stalled US-Iran negotiations.

• USD/CHF pulls back after bullish gap-up open as traders monitor Middle East tensions.
• Ongoing standoffs in the Strait of Hormuz continue to disrupt Oil supply flows and fuel inflation concerns.
• Markets now await the US CPI report due on Tuesday for fresh clues on the Fed’s policy outlook.

The Swiss Franc (CHF) regains traction against the US Dollar (USD) on Monday, with USD/CHF pulling back after opening the week with a bullish gap as the Greenback gives up part of its earlier gains while traders continue to monitor developments in the Middle East.

At the time of writing, the pair is trading around 0.7773 after touching an intraday high near 0.7795, though it remains up about 0.12% on the day.

The pullback in USD/CHF appears largely technical in nature as traders partially fill the bullish opening gap. However, the US Dollar’s downside remains limited as fading hopes for a near-term resolution to the US-Iran conflict support safe-haven demand for the Greenback.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 97.88 after hitting an intraday high near 98.15.

US President Donald Trump rejected Iran’s response to a US-backed proposal aimed at ending the war, calling it “totally unacceptable” in a post on Truth Social.

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said on Monday that Tehran was only trying to secure its rights and had offered “generous and responsible” suggestions to the US. Baghaei also said the latest proposal was not excessive and accused Washington of making “unreasonable demands.”

The lack of progress in reaching a deal is raising fears of a prolonged conflict between the US and Iran, while the ongoing standoff in the Strait of Hormuz continues to disrupt Oil supply flows.

As a result, Oil prices remain elevated, fueling inflation concerns globally and increasing pressure on central banks to maintain tight monetary policy settings. Traders are now awaiting the US Consumer Price Index (CPI) data due on Tuesday, which could influence expectations for the Federal Reserve’s (Fed) interest rate path.

In Switzerland, recent inflation data showed consumer prices rising for a second consecutive month, though inflation remains well below the Swiss National Bank’s (SNB) 2% target. The data suggests policymakers could keep interest rates unchanged for now as they continue to assess the impact of rising global energy prices.