Financial markets remained cautious on Friday as traders awaited clarity on a possible US-Iran peace deal, with conflicting reports emerging from various stakeholders. The Euro held steady against the US Dollar, with EUR/USD trading around 1.1573 and posting modest weekly gains, as investors adopted a wait-and-see approach due to uncertainty over the contents of a memorandum of understanding (MoU) between the US and Iran. Iranian Foreign Minister Abbas Araghchi stated that an MoU with the US has 'never been closer,' while Pakistan's Prime Minister Shehbaz Sharif claimed a final agreed text had been reached and that Islamabad was working closely with both sides to finalize next steps [1][2]. However, the specifics of the agreement remain unclear, with discrepancies over issues such as the release of frozen Iranian funds, the future of Iran's nuclear program, and the reopening of the Strait of Hormuz [1][2].
According to Pakistani Prime Minister Sharif, negotiators have locked down the text of the agreement, dismissing contrary reporting as misinformation. Iranian state media reported that the MoU would see the US lift sanctions on Iranian crude oil exports and Iran reopen the Strait of Hormuz. Additional accounts in Tehran mentioned a US troop withdrawal and a reconstruction commitment worth $300 billion or more, but these terms have not been acknowledged by Washington. US President Donald Trump denied Tehran's account of the terms and issued a warning to Tehran following a drone attack, while also suggesting a possible Geneva signing as soon as the weekend. Iran's Foreign Ministry blamed contradictory US positions for disrupting the process and pushed back on the weekend timeline [2].
Market reactions reflected the uncertainty. The Dow Jones Industrial Average (DJIA) climbed 0.6% to settle near 51,200, outperforming other US indices, while the tech-heavy Nasdaq Composite slipped 0.1%. West Texas Intermediate (WTI) crude oil futures fell about 3% to trade around $84 a barrel, indicating that energy markets may be pricing in potential relief in the Strait of Hormuz but are awaiting confirmation of the deal [2]. The US Dollar Index (DXY) consolidated around 99.75, and traders remained cautious ahead of next week's Federal Reserve (Fed) monetary policy meeting under newly appointed Chair Kevin Warsh [1].
Looking ahead, attention is focused on the upcoming Fed meeting, where a pause in rate hikes is fully priced in, but forward guidance will be closely watched for signals on future policy. In the Eurozone, traders are awaiting May inflation data, with the Harmonized Index of Consumer Prices (HICP) expected to remain unchanged at 3.2% year-over-year. The European Central Bank (ECB) recently raised interest rates by 25 basis points in response to persistent inflation above its 2% target [1]. Meanwhile, University of Michigan consumer sentiment printed 48.9 in the preliminary June read, beating consensus but remaining historically low, with 1-year inflation expectations easing to 4.6% from 4.8% [2].
CONCLUSION
Markets are in a holding pattern as conflicting reports and lack of official confirmation on a US-Iran peace deal keep traders cautious. The Dow outperformed on optimism, while oil prices fell on hopes of a breakthrough. Investors are now turning their attention to upcoming central bank meetings and key inflation data for further direction.