• USD/CHF retreats after the announcement of a delay in strikes against Iran.
• Falling Oil prices ease inflation concerns and support risk appetite.
• The Swiss Franc remains capped by central bank intervention risks.

USD/CHF trades lower around 0.7870 on Monday, down 0.12% at the time of writing, as the US Dollar (USD) weakens following a temporary easing of geopolitical tensions in the Middle East.

The move comes after US President Donald Trump said he had ordered a five-day postponement of potential strikes on Iranian energy infrastructure, pending ongoing discussions. The announcement triggered a sharp decline in Oil prices, easing inflation expectations and weighing on US Treasury yields as well as the Greenback.

However, the situation remains uncertain. Iranian sources, cited by Fars News Agency, deny any negotiations with Washington, while Tehran maintains a firm stance on the Strait of Hormuz. These conflicting signals continue to fuel market volatility, limiting the downside in the US Dollar.

In this context, the Swiss Franc (CHF), a traditional safe-haven asset, is not fully benefiting from the weaker US Dollar. Analysts at MUFG note that the Swiss National Bank (SNB) remains strongly opposed to excessive currency appreciation and stands ready to intervene in the foreign exchange market. This stance is capping CHF strength despite the fragile geopolitical backdrop.

Meanwhile, monetary policy expectations continue to support the US Dollar in the medium term. Markets have largely priced out Federal Reserve (Fed) rate cuts this year, as inflation risks remain elevated, particularly due to energy-related uncertainties. Major central banks are broadly maintaining a cautious stance, emphasizing risks linked to the evolving geopolitical situation.

With little US macroeconomic data scheduled at the start of the week, USD/CHF is likely to remain driven by overall market sentiment and geopolitical developments, which continue to act as the main short-term catalyst.