A more tepid mood set to greet European traders awaiting further US-Iran developments

Despite some escalation in military actions in the past day, markets are still holding out hope that we will see a US-Iran “deal” come forth this week.The US military conducted what it said was “self defense” strikes against Iran, with Tehran lambasting that as to saying it was a violation to the April ceasefire agreement. If this were to happen a few weeks back, perhaps there would be a negative perception to the situation.But since the weekend, all the focus is about how both sides are working towards sealing a framework agreement. This “deal” or memorandum of understanding what have you, has been “imminent” for a few days now. So, will today be the day?Markets continue to hold out hope with a more positive showing yesterday. Tech shares continue to surge higher with the S&P 500 and Nasdaq posting record high closes. The Dow fell though but it merely cuts back to the opening levels from Friday, which were already at record levels.Meanwhile, bond yields continue to cool while oil prices stayed on the backfoot for the most part. 10-year Treasury yields are now down to 4.47%, much lower from the high of 4.68% last week. As for WTI crude, it is down 2% again today to $91.95 after some volatile swings yesterday. However, it is considerably down from the highs last week near $105.Elsewhere, the dollar is seeing more mixed action this week but that follows from its opening gap lower on Monday. EUR/USD is up 0.3% on the week to 1.1640 now with GBP/USD up 0.3% on the week to 1.3450 currently. Meanwhile, USD/JPY continues to hold above the 159.00 mark with the yen currency itself unable to get off the floor despite the market optimism. As for AUD/USD, the risk pair is up 0.5% this week to 0.7160 levels now. But so far today, major currencies are not really doing much.Looking to precious metals, gold is keeping little changed at $4,513 on the day and is near flat on the week. It erased the gains from Monday in trading yesterday as traders are still reserving some caution over the whole US-Iran situation.As mentioned before, a framework agreement doesn’t mean an end to the conflict/war. It is merely a precondition to take the next step in facilitating nuclear discussions, which is the main sticking point. And even so, those preconditions may not hold over the supposed two months period.The US and Iran know exactly what puzzle pieces is needed to complete the picture. However, whether or not those pieces can actually fit together is a different issue. From earlier this week: How close are we actually to a US-Iran endgame?
This article was written by Justin Low at investinglive.com.

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