USD/CHF slips below 0.7900 as US Dollar weakens on easing risk aversion

USD/CHF lost ground after four days of gains, trading around 0.7890 during the Asian hours on Monday. The US Dollar (USD) weakens against peers as risk aversion eases on reports that the United States (US) may announce a coalition to escort ships through the Strait of Hormuz.

Moreover, US Energy Secretary Chris Wright said that he expects the US-Israel conflict with Iran to end within “the next few weeks,” potentially allowing oil supplies to recover and energy prices to decline.

However, traders have their eyes on the Middle East situation after the United States (US) forces reportedly targeted every military site on Kharg Island over the weekend, a hub that handles nearly 90% of Iran’s oil exports. While US President Donald Trump said oil infrastructure was not struck, Iran has warned it could retaliate against any US-linked oil facilities in the region.

President Trump also called on allied nations, including the UK, France, China, and Japan, to assist in securing the Strait of Hormuz, with reports suggesting a potential White House announcement in the coming days. Meanwhile, European Union (EU) foreign ministers are meeting in Brussels to discuss a possible naval response to the effective closure of the Strait.

US Federal Reserve (Fed) is expected to keep interest rates unchanged on Wednesday. Traders will closely monitor policymakers’ guidance for the remainder of the year, particularly regarding inflation risks stemming from the recent surge in energy prices.

The USD/CHF pair may further decline as the Swiss Franc (CHF) may gain support from safe-haven demand as traders remain cautious amid persistent geopolitical risks. However, its upside could be limited after the Swiss National Bank (SNB) signaled greater readiness to intervene in FX markets.