The US Dollar edged up against the Swiss Franc on Thursday and held above 0.7900 after rebounding from 0.7870. Risk appetite stayed muted as the Iran ceasefire showed strain, which supported demand for the US Dollar.
Soon after the ceasefire was announced, Iran closed the Strait of Hormuz. Iran said Israel broke parts of the proposal with an attack on Lebanon that killed more than 180 people.
Ceasefire Risks And Market Reaction
Israel and the US said operations against Hezbollah in Lebanon are not covered by the agreement. US President Trump warned of further action if Tehran does not comply.
The US and Iran said they will send delegations to peace talks in Pakistan on Saturday. Markets remained cautious as hostilities could resume.
In the US, minutes from the latest Federal Reserve meeting showed a balanced approach. Rate cuts remain possible, while some officials discussed tighter policy if inflation stays above the 2% target for a long time.
Later Thursday, the US PCE Prices Index is due, ahead of Friday’s CPI. The CPI will show March data, seen as more relevant because it reflects the impact of the war.
Key Data And Volatility Outlook
In Switzerland, the March unemployment rate stayed at 3%. The Swiss calendar has otherwise been quiet this week.
The current fragility of the Iran ceasefire points directly to higher market volatility in the coming weeks. We are seeing this reflected in the CBOE Volatility Index (VIX), which has climbed above 25, a level not sustained since the banking sector concerns we saw in late 2025. This environment suggests buying options to define risk is more prudent than taking outright futures positions.
The closure of the Strait of Hormuz is a critical development for global energy, and derivative markets are pricing this in. We saw West Texas Intermediate (WTI) crude futures for May delivery jump nearly 5% on the initial news, reminiscent of the supply shocks from early 2022. Traders should be looking at call options on oil to hedge against, or speculate on, a further escalation impacting supply chains.
This Friday’s US Consumer Price Index (CPI) is the next major hurdle, with markets highly sensitive to inflation data. Consensus forecasts are for a headline number around 3.6%, which would confirm that inflation remains sticky and complicates the Federal Reserve’s path to cutting rates. A straddle or strangle on a broad market index ETF could be an effective way to play the expected price swing following the release, regardless of direction.
The US Dollar is benefiting from both safe-haven flows and the potential for a more hawkish Fed. For the USD/CHF pair, this creates clear upward pressure, even with the Franc’s own safe-haven status being a factor. Buying call options on USD/CHF offers a defined-risk way to position for a break higher if Middle East tensions persist or US inflation surprises to the upside.
