The Swiss Franc (CHF) extended its gains against the US Dollar (USD) on Monday, with the USD/CHF pair dropping to 11-day lows below 0.7820, down from highs above 0.7900 last week, as optimism grew over a potential peace deal between the US and Iran and the possible reopening of the Strait of Hormuz [1]. Risk flows dominated the markets at the start of the week, with the US Dollar weakening broadly against major currencies, including a 0.36% decline versus the Swiss Franc, as shown in the daily currency performance table [2].
US President Donald Trump stated over the weekend that Washington and Tehran were drawing closer to a peace agreement, brightening investor sentiment. However, Trump also warned that the US would maintain the blockade on the Strait of Hormuz and indicated he was not in a rush to finalize a deal, sending mixed signals to the market [1][3]. According to Axios, the US and Iran are reportedly close to signing an agreement involving a 60-day ceasefire extension, reopening the Strait of Hormuz, and Iran clearing mines in exchange for the US lifting its blockade on Iranian ports [2]. US Secretary of State Marco Rubio described the proposal to open the straits as 'fairly strong' [2].
On the Iranian side, a Foreign Ministry spokesperson confirmed negotiations to end the war but stated that nuclear issues were not currently being discussed, emphasizing that 'management of the strait belongs to the coastal countries' [1][3]. Contradicting this, a senior Iranian diplomat told ISNA that nuclear and highly enriched uranium issues would be discussed with the US in 60-day negotiations in exchange for sanctions relief and unfreezing of assets [2][3]. The Iranian Foreign Ministry also clarified that, despite progress on many topics, this does not mean an agreement is imminent, and there are no specific details yet about the management of the Strait of Hormuz [2][3].
Market reactions were notable: the Swiss Franc strengthened as the US Dollar weakened, reflecting increased risk appetite [1][2]. WTI Oil prices rebounded to near $91.60 from an intraday low of $89.52, and the US Dollar Index (DXY) recovered to around 99.10 after stabilizing near 99.0, following comments from Iran [3]. Investors are also watching for the preliminary US Personal Consumption Expenditures (PCE) Price Index data from April later in the week, with markets now pricing in a more than 50% chance of a Fed rate hike in 2026, a shift from earlier expectations of rate cuts before the US attack on Iran on February 28 [1].
CONCLUSION
Markets responded positively to hopes of a US-Iran agreement on the Strait of Hormuz, with the Swiss Franc strengthening and risk appetite improving. However, mixed messages from both US and Iranian officials and a lack of concrete details have kept uncertainty elevated. Investors remain cautious, awaiting further developments and key US inflation data later in the week.