USD/CHF was lower on Friday and was set for a second weekly fall, trading near 0.7773, close to two-month lows. The move came with broad US Dollar weakness.
Trading remained sensitive to developments in the Middle East war, as markets watched for progress on a possible US-Iran deal. Secretary of State Marco Rubio said the United States expected a response from Tehran on its latest peace proposal later on Friday.
Market Focus Shifts To Policy Divergence
The US Dollar Index (DXY) was around 97.94, down about 0.34% on the day. Reports of clashes between US and Iranian forces near the Strait of Hormuz kept tensions elevated.
US labour data also shaped rate expectations. Nonfarm Payrolls rose by 115K in April versus 62K expected, after March’s 185K (revised from 178K), while unemployment held at 4.3%.
Average Hourly Earnings increased 0.2% month-on-month versus 0.3% expected, and yearly wage growth rose to 3.6% from 3.4% versus 3.8% forecast. On charts, the pair stayed below the 20-day SMA at 0.7830, with resistance at 0.7897 and support near 0.7763; RSI was near 40 and MACD remained negative.
Looking back to this time in 2025, we saw USD/CHF weakness driven by hopes of a geopolitical deal, which pushed the pair toward 0.7760. The dollar’s role as a safe haven was diminishing, creating a bearish sentiment that was technically driven. Today, the landscape is fundamentally different, with market focus shifting from diplomatic headlines to starkly divergent central bank policies.
Currently, USD/CHF is trading much higher, near 0.9080, reflecting a significantly stronger US dollar. The US Dollar Index (DXY) is firm above 105, a stark contrast to the sub-98 level seen last year. This strength is underpinned by persistent inflation, with the latest headline CPI for April 2026 coming in at a higher-than-expected 3.4%.
Options Strategy For Further Upside
The primary driver has shifted to a durable trend of monetary policy divergence that we see continuing. The Federal Reserve is holding interest rates steady in the 5.25%-5.50% range, while the Swiss National Bank (SNB) already cut its key interest rate to 1.50% in March 2026. This widening interest rate differential makes holding US dollars far more attractive than Swiss francs, a concept known as positive carry.
Given this clear upward trend, we believe traders should consider strategies that profit from further USD/CHF strength. Buying call options is an attractive approach, as it allows for participation in the upside while capping potential losses to the premium paid. This is preferable to being outright long the spot pair, which carries greater risk if the Fed unexpectedly signals a dovish pivot.
We would look at call options with strike prices above 0.9100, targeting a move towards the year-to-date highs seen near 0.9220 in early April. The defined risk of an option contract is particularly valuable ahead of next week’s US Producer Price Index (PPI) data. This report could inject volatility and test the current bullish conviction in the market.
The technical levels from last year, such as the 0.7830 resistance, are no longer relevant in the current market structure. Instead, the psychological 0.9000 level now acts as a key support area for the pair. A decisive break below this level would be needed to question the dominant bullish trend we are witnessing.
