Swiss franc under pressure as SNB signals readiness to intervene

The USD/CHF pair advanced during early European trading hours on Thursday, supported by renewed geopolitical tensions in the Middle East that boosted demand for the US Dollar against the Swiss Franc.

The currency pair climbed to around 0.7895 as investors reacted to fresh military developments involving the United States and Iran.

Market participants also remained focused on upcoming economic data releases, including the Swiss ZEW Survey and the US April Personal Consumption Expenditures (PCE) Price Index report due later in the day.

Middle East tensions support the US Dollar

The US Dollar strengthened after reports emerged that the United States had conducted new strikes on an Iranian military site that was allegedly posing a threat to US forces and maritime traffic in the Strait of Hormuz.

US officials described the operation as measured, purely defensive, and aimed at maintaining the ceasefire in the region.

Adding to the geopolitical uncertainty, US President Donald Trump said on Wednesday that he remained determined to secure a favourable agreement to end the conflict with Iran.

Trump also warned that Iran’s attempts to delay negotiations would not succeed because “I don't care about the midterm elections.”

The latest developments increased demand for the Greenback as investors moved toward safer assets amid rising regional instability.

Iran's retaliation adds to market caution

The US Dollar extended gains during the Asian trading session on Thursday after Iran reportedly retaliated against recent US attacks near Bandar Abbas airport, according to reports from Tasnim agency.

Iran’s Islamic Revolutionary Guard Corps (IRGC) confirmed that it had targeted US military bases and warned that any additional attacks from the United States would face a more decisive response from the Iranian military.

The escalation followed earlier military operations by the United States Central Command on Wednesday.

Those operations were described as defensive strikes and reportedly targeted Iranian boats involved in deploying mines.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, was trading around 0.25% higher near the 99.50 level.

Swiss franc outlook remains limited

Despite the Swiss Franc traditionally benefiting during periods of geopolitical uncertainty, analysts suggested that the currency’s upside could remain limited in the near term.

Rabobank Senior FX Strategist Jane Foley said that although Switzerland continues to show robust economic growth and strong Purchasing Managers’ Index (PMI) readings, inflation remains very low.

The Swiss central bank has also signaled a greater willingness to intervene against excessive franc strength, particularly while geopolitical risks linked to the Iran conflict remain elevated.

This stance could help prevent sharp gains in the Swiss currency and provide additional support to the USD/CHF pair in the short term.

Investors are now awaiting the release of the US PCE inflation report and the Swiss ZEW Survey for further direction on the pair.