USD/CHF Tests 0.7995 as Dollar Gains on Middle East Tensions

The possibility of a Pentagon ground operation on Iranian territory is raising concerns among investors and forex traders, as it could trigger retaliatory strikes by Iran against energy infrastructure in the Persian Gulf, further increasing global inflation risks that are already elevated. Over the weekend, representatives of the Ansar Allah movement announced their entry into the conflict, which could lead to partial disruption of the Bab el-Mandeb Strait — the second most important route for global oil transportation. Additionally, on March 29, Iran’s Islamic Revolutionary Guard Corps (IRGC) carried out missile and drone strikes on two aluminum plants — EMAL, part of Emirates Global Aluminium in the UAE, and ALBA in Bahrain. This may accelerate consumer price growth, as rising aluminum costs could add to already elevated energy prices. Against this backdrop, market participants continue to increase dollar purchases, which are also supported by expectations that the Federal Reserve will maintain current policy settings for an extended period.

Inflationary pressure in the U.S. economy was already above the 2.0% target before the U.S.–Iran confrontation, with February annual inflation at 2.4% and core inflation at 2.5%, and is now expected to accelerate further. Meanwhile, the labor market remains stable, and Friday’s data at 15:30 (GMT+2) may show unemployment around 4.4%, while employment is expected to increase by 56K. Under these conditions, the scenario of unchanged monetary policy until early 2027 appears plausible. Signals supporting this outlook are reflected in comments from policymakers. For example, Richmond Federal Reserve President Thomas Barkin stated Friday that the Middle East crisis and rapid adoption of artificial intelligence technologies justify maintaining borrowing costs in the 3.50–3.75% range for an extended period.

The Swiss franc is currently under local pressure following weak data from the Swiss Economic Institute (KOF), where the leading indicator fell from 103.8 to 96.1 in March — significantly below expectations of 101.1. Monetary policy is also likely to remain unchanged in the near term, although investors remain cautious after Swiss National Bank Chairman Martin Schlegel signaled readiness to intervene in currency markets if the franc strengthens significantly again.

Support and Resistance Levels

Technically, USD/CHF is testing the 0.7995 level (Murray [7/8]). A breakout above this level could open the path toward 0.8117 (Murray [+1/8]) and 0.8178 (Murray [+2/8]). Conversely, a break below the Bollinger Bands midline near 0.7873 (Murray [5/8]) may trigger a decline toward 0.7751 (Murray [3/8], lower Bollinger Band) and 0.7629 (Murray [1/8]).

Technical indicators confirm the potential for further growth: Bollinger Bands and Stochastic are turning upward, while the MACD histogram remains stable in positive territory.

Resistance levels: 0.7995, 0.8117, 0.8178.

Support levels: 0.7873, 0.7751, 0.7629.

Trading Scenarios

Long positions may be opened above 0.7995 with targets at 0.8117 and 0.8178 and a stop-loss at 0.7910. Implementation period: 5–7 days.

Short positions may be opened below 0.7873 with targets at 0.7751 and 0.7629 and a stop-loss at 0.7960.

Conclusion:

The U.S. dollar remains supported by geopolitical uncertainty and expectations of prolonged Fed policy stability. A breakout above 0.7995 could strengthen bullish momentum in the near term. However, weak Swiss data and potential SNB interventions may increase volatility.