USD/CHF fell to about 0.7766 on Thursday, its lowest level since 10 March, as the Swiss franc strengthened and the dollar weakened. The move followed renewed expectations of a US-Iran agreement.
Iran said it is reviewing a US-backed proposal, while US President Donald Trump said on Wednesday that talks over the past 24 hours had been “very good” and that a deal was possible. The proposal includes Iran pausing nuclear enrichment, the US lifting sanctions, and releasing billions of US dollars in frozen Iranian funds, with both sides expected to end the blockade around the Strait of Hormuz.
Dollar Weakness And Oil Decline
Oil prices dropped and the US Dollar Index (DXY) moved towards pre-war levels. DXY, which tracks the dollar against six major currencies, traded near 97.88, down about 0.15% on the day.
Traders also reviewed the Federal Reserve path as lower oil prices eased inflation concerns. Cleveland Fed President Beth Hammack said rates may stay on hold “for a long period” and warned that excessive cuts could raise inflation.
US initial jobless claims rose to 200K for the week ending 2 May, from 190K, versus 205K expected. Switzerland’s CPI rose to 0.6% year-on-year in April from 0.3% in March, with 0.3% month-on-month, still below the SNB’s 2% target.
We are seeing significant downward pressure on the USD/CHF pair, driven by the possibility of a US-Iran breakthrough. This environment makes buying USD/CHF put options attractive, especially with strikes below the recent low of 0.7766. This move reverses a significant portion of the gains we saw during the heightened tensions of 2025, when the pair traded above 0.9000.
Options Strategies For Volatility
The situation is still fluid, and headlines can swing the market in either direction. Therefore, we should consider strategies that benefit from increased price swings, like long straddles or strangles, to capture a large move whether the deal materializes or falls apart. Implied volatility on major currency pairs has jumped by over 15% in the last week, signaling that the options market is pricing in significant upcoming movement.
The market is now scaling back expectations of a hawkish Federal Reserve, as falling oil prices ease inflation fears. Ahead of tomorrow’s Nonfarm Payrolls report, we can use short-dated options to position for the outcome; a weak jobs number would likely accelerate the dollar’s decline and validate bearish USD/CHF positions. The futures market is now pricing in less than a 20% chance of a rate hike by year-end, a sharp reversal from the nearly 50% probability priced in just last month.
While the Swiss Franc is gaining strength, we must remain aware of the Swiss National Bank’s historical aversion to an overly strong currency. If USD/CHF breaks decisively below the 0.7700 level, the risk of intervention from the SNB increases, making it prudent to protect short positions with out-of-the-money call options. We remember the market shock in 2015 when the SNB abandoned its Euro peg, a reminder that they can act decisively when they feel the currency has moved too far, too fast.
