On Monday, the USD/CHF pair traded within Friday's range just below the round level of 0.8100.
Signals indicating a stabilization of global risk sentiment, evidenced by the optimistic stance in European stock markets, have undermined the dollar's position in this pair. However, the rising tensions between the U.S. and Iran, along with renewed expectations for Federal Reserve interest rate hikes, support the dollar, pushing it upward.
The U.S. continues to strike Iran for nine consecutive nights, while Iran responds by launching ballistic missiles and drones targeting American allies in the region. This creates a risk of a broader geopolitical conflict.
Additionally, the closure of the Strait of Hormuz contributes to high oil prices, amplifying inflation concerns and supporting the hawkish mandate of the Fed. These factors may limit significant weakening of the dollar.
On Monday, no significant economic data was scheduled for release in the U.S. that could influence the market; thus, the dollar's exchange rate largely depended on the views of key FOMC members. Moreover, upcoming geopolitical events may continue to increase market volatility and stimulate demand for the U.S. dollar, which will, in turn, create new trading opportunities in the USD/CHF pair.
From a technical perspective, the pair was attempting to break and hold above the 20-day SMA. Meanwhile, oscillators are positive, confirming bullish dominance in the market. If the pair sustains its position above the round level of 0.8100, bulls will challenge the July high. If it fails to hold above the 20-day SMA, the pair may accelerate its decline toward the 0.8045 zone.
