Major currency pairs traded within familiar ranges midweek as investors remained cautious, awaiting further clarity regarding a potential Memorandum of Understanding (MOU) between the United States and Iran [1]. The lack of resolution stems from ongoing disputes over the language related to Iran's nuclear program and sanctions relief, with both sides reportedly still working toward finalizing the agreement [1]. This uncertainty follows recent US 'self-defense strikes' on Iranian missile sites and mine-laying vessels, which prompted threats of retaliation from Iran's Islamic Revolutionary Guard Corps (IRGC). The IRGC labeled the US actions as a violation of the ceasefire, claiming to have downed a US drone and fired at a fighter jet; however, there has been no official confirmation of a ceasefire cancellation [1].
The US Dollar Index remained stable, moving sideways just above 99.00 after marginal gains on Tuesday [1]. According to a table of percentage changes, the US Dollar was strongest against the Australian Dollar this week, with a 0.30% gain, and also showed gains against the Japanese Yen (0.30%) and the Canadian Dollar (0.13%) [1]. US stock index futures were up about 0.2% in the European morning on Wednesday, indicating a modestly positive market reaction despite geopolitical tensions [1].
Elsewhere, the Reserve Bank of New Zealand (RBNZ) left its policy rate unchanged at 2.25%, as expected. The RBNZ cited the Middle East conflict as a factor increasing near-term inflation and weakening economic activity. Additionally, the RBNZ revised its interest rate projection for June 2027 higher to 3.07% from 2.62% [1].
Looking ahead, the US economic calendar for the second half of the day includes the ADP Employment Change 4-week Average data and several speeches from Federal Reserve policymakers, which may provide further direction for markets [1].
CONCLUSION
Markets remained stable as investors awaited clarity on the US-Iran truce negotiations, with the US Dollar showing modest strength and US stock futures slightly higher. Geopolitical tensions have contributed to near-term inflation concerns, as noted by the RBNZ. The market's cautious stance reflects ongoing uncertainty over the finalization of the US-Iran MOU.