• USD/CHF rises as demand for safe-haven assets strengthens amid geopolitical tensions.
• The US Dollar benefits from defensive flows despite mixed US economic signals.
• Swiss National Bank outlook limits downside potential for the Swiss Franc.

USD/CHF trades around 0.7840 on Monday, up 0.28% on the day, supported by a renewed wave of risk aversion that is boosting the US Dollar (USD). Concerns over a potential escalation in the Middle East dominate market sentiment following conflicting reports about an incident involving a US warship in the Strait of Hormuz. Although some US sources denied a direct missile strike, the lingering uncertainty is prompting investors to reduce exposure to riskier assets.

Tensions escalated after Iran’s Fars news agency reported that two missiles targeted a US warship near the Strait of Hormuz, after it allegedly ignored Tehran’s warnings. The incident comes in an already sensitive context, following a US plan to secure navigation through the area.

However, US officials denied any direct strike, while Iranian sources suggested it was a warning shot with no confirmed damage. This uncertainty is keeping markets on edge, especially as Iran warned that any US incursion would be considered a violation of the ceasefire.

The US Dollar is benefiting from these defensive flows, gaining against its major peers. The rise in Oil prices, driven by these geopolitical tensions, is also reinforcing the move, as investors anticipate possible disruptions to global energy supply.

In this context, traders remain cautious ahead of key US data releases, notably the ADP Employment Change report and, above all, Friday’s Nonfarm Payrolls (NFP). These figures, along with speeches from several Federal Reserve (Fed) officials, are expected to provide further clarity on the monetary policy outlook following last week’s hawkish tone.

On the Swiss side, the Swiss Franc’s (CHF) fundamentals remain solid, limiting its downside against the Greenback. Recent data showed an improvement in manufacturing activity, with the SVME Manufacturing Purchasing Managers Index (PMI) rising to 54.5 in April. However, according to Commerzbank, the Swiss National Bank (SNB) has limited room to sustainably weaken the currency. The bank notes that large-scale interventions would be required to influence the Swiss Franc’s trajectory, an option seen as unlikely due to balance sheet risks and political constraints.

Therefore, while the US Dollar is currently supported by safe-haven demand, the Swiss Franc's structural resilience could cap further upside in USD/CHF in the short term.