USD/CHF climbs further beyond mid-0.7800s as Hormuz risks continue to underpin USD

The USD/CHF pair turns positive for the third straight day following an intraday dip to the 0.7830 region and climbs to a fresh one-and-a-half-week high during the Asian session on Thursday. Spot prices climb beyond mid-0.7800s and look to build on this week's recovery move from the lowest level since March 11 amid a broadly firmer US Dollar (USD).

The initial optimism over a temporary extension of the US-Iran ceasefire fades rather quickly amid the lack of progress in peace talks and the instability in the Strait of Hormuz. In fact, US President Donald Trump said on Tuesday that the US Navy blockade of Iranian ports will continue, while Iran has set the complete removal of the US naval blockade as a precondition for resuming negotiations. This keeps geopolitical risks in play, assisting the USD in prolonging its uptrend for the third straight day and acting as a tailwind for the USD/CHF pair.

Meanwhile, the Wall Street Journal reported on Wednesday that Iran fired on three ships in the Strait of Hormuz and escorted two of them to Iranian waters. This comes on top of continued disruptions to energy supplies through the strategic waterway, which remains supportive of elevated Crude Oil prices, fueling inflationary concerns. Furthermore, a resilient US economy increases the threshold for the US Federal Reserve (Fed) to cut interest rates. This further supports the USD and validates the positive outlook for the USD/CHF pair.

Despite the aforementioned supportive fundamental backdrop, bulls might still await a sustained move beyond the 100-day Simple Moving Average (SMA) before positioning for further gains. Traders now look to the US economic docket – featuring the release of usual Weekly Initial Jobless Claims and the flash PMIs – for some impetus later during the North American session. The focus, however, remains on fresh developments surrounding the US-Iran saga, which might continue to infuse volatility around the USD/CHF pair.