The Iran Deal Changes Everything – Or Does It?
Thoughts on the Market, by Andy Krieger
June 15, 2026
On June 14, 2026, President Trump declared the US-Iran agreement “now complete,” ordering the immediate removal of the US naval blockade and confirming toll-free passage through the Strait of Hormuz. The “deal” – which kicks the can way down the road for most key decisions -- is a 60-day interim arrangement, and it includes sanctions waivers allowing Iran to sell oil freely, a halt to uranium enrichment pending nuclear negotiations, and a ceasefire in Lebanon between Israel and Hezbollah. The release of Iranian sanction funds also needs to be negotiated.
The long-term geopolitical significance of this deal, however, is messy, because many of the biggest issues remain unresolved. My focus in this write-up, therefore, relates to a somewhat more immediate macro significance and how things are likely to play out over the coming weeks.
One very obvious immediate impact was bound to be on equity markets, which to a large extent had already priced in a sort of peace premium. Naturally, we are having an additional relief rally as a market that is this bulled up won’t pass up any opportunity to buy more stocks and push prices even higher. In this context, I want to reiterate my advice over the past several weeks – it is ok to stay long, but please gently scale out of your long positions, locking in some profits and reducing your equity exposure. I also recommend that you layer in some long-term hedging protection against your remaining holdings. Markets that are priced to perfection – or beyond – don’t typically reverse gently. Once the bubble pops, market action will be very, very ugly.
I don’t know what the catalyst might be to eventually pop this astonishing bubble, and I don’t know when this might happen, so I am recommending that we take this one step at a time. In terms of equities, I am expecting the market to rally another 2 1/2% - 3% before running into some serious profit-taking. Depending on the technicals, I may suggest a more aggressive risk-reduction over the coming days, but I will revisit that as market conditions play out.
I strive to stay as politically neutral as possible in my newsletter, but that doesn’t stop me from commenting on policy decisions. As you know, I was a strong critic of Fed policy when Powell announced that the inflationary pressures post-Covid were “transitory.” Today, nearly half a decade later, we are still dealing with the effects of that policy blunder. I have also lauded Powell for standing up to the attacks by President Trump to bulldoze him into prematurely cutting interest rates. Powell believes strongly in the critical importance of Fed independence, and he even withstood personal criminal investigations in defense of that belief.
I think it is fair to say that the U.S. attacks on Iran have not worked out as the U.S. administration wanted. Yes, President Trump can congratulate himself for being the first president to make peace with Iran, but he is also the first American president to have waged war on Iran. Moreover, the peace, disarmament, and positive relations which previous presidents tried to achieve have certainly not actualized under Trump, and they don’t seem likely to spontaneously materialize just because he claims it is so.
Given the fact that prior to the war, the Strait of Hormuz was fully and freely open for traffic, it’s reopening is hardly a great achievement. Moreover, its closure came at a great cost to many. Many items of the June 14 MOU remain unclear, but the reactions of the Iranians (who are gloating) and the Israelis (who are beyond upset) suggest that the positive outcomes of this war are few and far between.
In terms of the global economy, oil reserves have been heavily drawn down, so the reopening of the Strait has led to an initial sell-off in the price of oil. But the sell-off may not prove to be as great as people want, because it will take a long time to replenish the depleted reserves – and that will likely be a priority for many nations. Moreover, the recent spike in inflation to three-year highs is not likely to be reversed as quickly as hoped. Many of the price pressures have filtered through the broader economy, so it is not a given that inflationary pressures will dissipate as the administration hopes.
Major oil shipping companies are maintaining a very cautious attitude, so shipping is unlikely to commence quickly and confidently. In fact, these companies have good reason to be cautious; The current cease-fire is hardly a permanent solution, so a significant risk premium will almost certainly be priced into the markets. Iran and the U.S. have essentially zero trust in one another, so reaching a permanent, lasting solution will be very difficult. Keeping all of this in mind, let’s take a closer look at the currency market.
The Macro Framework: Three Interlocking Forces
1. The Fed Gets Cover to Stand Down
Coming into this week, the Federal Reserve was holding rates at 3.50–3.75%. What had been an expected cycle of four rate cuts in 2026 had initially been compressed down to a single move, or possibly none, as oil prices surged past $115/barrel during the Strait of Hormuz crisis and pushed inflation, already running at 3%, further from target. Eventually, rate expectations reversed, and even the easing bias of the Fed has largely been removed. The U.S. treasury market is suggesting that the Fed needs to hike rates; even after the so-called peace announcement, there is still a 25% probability of a Fed hike by December.
The Iran deal, however, dismantles a portion of that inflation argument almost overnight. With the Strait reopening and Iranian oil returning to global markets, energy prices have already dropped substantially. This removes the primary obstacle to Fed easing and, critically, reduces a portion of the remaining case for hiking. New Fed Chair Kevin Warsh, who replaced Jerome Powell in May, has already shown a disposition toward lower rates. The deal gives him both the rationale and the political cover to lean dovish.
Fed policy-making is going to be complicated at best. The booming job report removed some of the additional rationale for the Fed easing, but I expect Warsh to take a wait-and-see attitude regarding rate moves. At a minimum, I think it is safe to say that US rate expectations shift from “on hold with upside risk” to “neutral, with possible rate cuts coming by Q4.” That is a structural headwind for the dollar.
2. The ECB Is Already Hiking -- and May Not Stop
Just three days ago, on June 11, the European Central Bank raised its deposit rate to 2.25% — its first hike in nearly three years. The move was driven explicitly by the inflationary consequences of the Iran war on European energy costs, and markets were already pricing a follow-on hike in September.
Even with oil prices falling on the back of today’s deal, the ECB is unlikely to abandon its tightening posture immediately. ECB officials have already signaled concern that inflation has broadened well beyond energy into services and wages, a stickiness that won’t reverse just because Hormuz reopens. The lesson of 2022, when the ECB was criticized for treating energy-driven inflation as “transitory” and reacting too slowly, is fresh. Christine Lagarde and the Governing Council will not want to repeat that mistake.
The result? The ECB almost certainly hikes again in September, regardless of oil. Meanwhile, the Fed will likely be pivoting away from rate hikes, which will the shift the differential dynamic towards a narrowing -- ECB tightening, Fed on hold, and possibly shifting back toward easing. This is a critical driver of potential EUR/USD upside.
3. AUD and NZD: Risk-On Plus Rate Resilience
The Australian and New Zealand dollars operate differently from the euro. They are commodity and risk-appetite currencies, and the Iran deal hits both of those levers favorably.
Lower oil prices reduce input cost inflation across Asia and the Pacific, improving growth prospects in China, which is Australia’s dominant trading partner. Better Chinese demand for iron ore, copper, and agricultural products flows directly to Australian and New Zealand export revenues. Simultaneously, the resolution of the war removes the single biggest source of global risk aversion that has been weighing on these currencies since February.
On rates, neither the Reserve Bank of Australia nor the Reserve Bank of New Zealand was forced into the kind of hawkish pivot that distorted Fed and ECB policy this year. Australian rates sit at 4.35%, and while the RBA has signaled a cautious stance, there is no case for cutting given still-elevated core inflation.
New Zealand’s RBNZ is in an even more explicitly hawkish position, and this is one of the most important elements of the NZD case. At its May 27 meeting, the Monetary Policy Committee was split 3-3 on whether to hike immediately, with Governor Anna Breman casting the deciding vote to hold at 2.25%. Critically, that split was not a disagreement about whether rates need to rise, as all six members agreed they do. The debate was purely about timing. Breman subsequently confirmed that the Committee broadly agreed rates are heading higher, and the updated OCR projections released alongside the decision showed rates significantly above the February forecast through both 2026 and 2027. The RBNZ now expects inflation to peak at 4.3% before returning to the 2% target only by mid-2027. Swap markets quickly priced in 75 basis points of tightening by year-end, with the July meeting described as “live.”
The Iran deal does not change this calculus in the way it might first appear. The RBNZ has already signaled that even if geopolitical tensions were to resolve immediately, the inflationary effects have now broadened beyond fuel into wages, shipping costs, and services, and these price pressures would persist. The rate hiking cycle is underway in all but name.
The result of this is that AUD and NZD benefit from a three-way tailwind: falling safe-haven demand for dollars, improving global risk appetite, and a favorable and widening rate differential against a Fed that is pivoting toward cuts.
The Technical Picture: Corrections Create Opportunity
The fundamental case for AUD, NZD, and EUR strength against the dollar is compelling on its own. What makes the trade genuinely attractive right now is that all three currencies have undergone significant corrections against the USD in recent weeks, setting up entries at levels that align with key technical support zones.
EUR/USD -- Testing Critical Support
EUR/USD is currently trading around 1.1580, having corrected from highs near 1.2080 earlier in the year. The pair is now testing the SMA200 and sitting just above the 1.1560–1.1600 support band that technicians have identified as the key pivot. The RSI has recently fallen to the mid-30s -- deeply oversold in the short-term context -- and MACD remains in negative territory, suggesting the correction has been exhaustive rather than impulsive to the downside.
Resistance to watch on the recovery: 1.1820 (near-term), then the prior highs at 1.2080. On a sustained break of today’s catalyst-driven move, a return toward 1.2000 over the two-month window is a reasonable target. The longer-term structural picture includes a three-year major uptrend from the 2022 low of .9535, and this trend remains intact. The June 14 deal removes one key development that could have broken it. The collapse in the Euro in 2022 started above 1.2500, and there is a reasonable chance that this move could re-test that level over some months.
The risk to this setup: if the ECB pivots abruptly and removes the September hike expectation, EUR/USD loses its narrowing rate differential tailwind. Watch Lagarde’s commentary closely in the coming weeks.
AUD/USD — Fibonacci Support at the 70-Cent Zone
AUD/USD has been one of the most technically interesting stories of the past month. The pair dropped roughly 4% from its 2026 highs near 0.7280 to test Fibonacci support at the 0.70 level — a zone that I find important for multiple technical reasons.
The selloff was driven almost entirely by geopolitical risk aversion and the oil-driven inflation narrative that was pressuring commodity currencies. Those drivers are now reversing simultaneously. Current price is around .7060, sitting above important support levels..
The technical setup here is arguably the cleanest of the three pairs. A bounce from the 0.70 zone, accompanied by the fundamental shift from today’s deal, sets up a return to at least the 0.7280 prior highs as the two-month objective if momentum builds. The 55-day moving average, currently near 0.7120, will be the first meaningful resistance to clear. Aussie has been swinging back and forth, above and below this particular moving average, and I suspect it is going to try to move well above that average over the coming weeks and months.
The Aussie has already had a significant recovery from its multi-year lows at .5915, but it looks like it could easily start a serious run towards the .7500 to .7650 levels. Reaching these levels in two months might not be possible, but a rally of 4%-5% from current levels is certainly plausible.
In terms of interest rates, The Reserve Bank of Australia (RBA) has delivered three consecutive 25bp hikes in 2026 --February, March, and May -- bringing the cash rate to 4.35%. The RBA's own statement cited inflation that was already too high before the Middle East conflict began, with higher fuel prices adding further pressure. Headline CPI hit 4.6% and trimmed mean CPI 3.5%, both above the 2–3% target band. Reserve Bank of Australia
The RBA is expected to hold rates steady at 4.35% on June 16, pausing after three hikes. The consensus view is that three consecutive hikes earn a pause to assess the impact.
Governor Bullock's tone after the May hike was telling. She said the cash rate is "now a bit restrictive," giving the RBA "space to see how the conflict plays out," and explicitly stated the Board is "now in a position where we've got space to be alert to both sides of the risks to the inflation outlook." That’s a genuine pivot from pure hawkishness toward a more balanced stance. In any event, the Aussie enjoys a positive carry against the U.S. dollar, and that will further lend support.
NZD/USD -- Deep in the Range, and the Most Mispriced
NZD/USD has been the weakest of the three going into today. The Kiwi made a 2026 high of 0.6093 and has corrected all the way to current levels around 0.5835, a decline of roughly 4.2%. The 52-week range spans 0.5580 to 0.6122, with current prices sitting around the middle of this range. In the bigger picture, the Kiwi has crashed from a post-Covid high around .7460, and it has tremendous potential upside from current levels even if it is just a corrective rally of the entire decline.
What makes NZD the most asymmetrically mispriced of the three pairs is the gap between the domestic rate story and the price action. The NZD has been sold as a risk-off proxy during the Iran crisis, which is fair, as far as it goes, but the selling has entirely ignored the RBNZ’s increasingly hawkish posture. The May 27 meeting produced a dead 3-3 split vote, with all six MPC members agreeing rates need to rise and the debate confined entirely to timing. The RBNZ’s own OCR projections were revised significantly higher, swap markets priced 75 basis points of hikes by year-end, and Governor Breman explicitly stated that even a full resolution of the Middle East conflict would not remove the case for tightening, because inflation has now broadened well beyond energy.
In other words: the market has been selling NZD because of geopolitical risk, but the RBNZ has told it clearly that the rate hiking cycle is coming regardless. With geopolitical risk now unwinding to some extent on the back of Sunday’s deal, the NZD is set to reprice both the risk-on recovery and the rate reality simultaneously. That double repricing is the source of the asymmetry.
Moreover, HSBC's forecast called for GDP growth to pick up from a very weak 0.4% in 2025 to an above-trend rate of 2.5% in 2026, driven by the lagged effect of 325 basis points of RBNZ rate cuts since August 2024. I am expecting these rate cuts to support a pickup in household consumption and business investment, adding more support to the RBNZ’s tightening bias. Governor Breman herself noted that earlier cuts continue to filter through, and that a quicker resolution to the Middle East conflict could unlock stronger growth this year.
A return to the 0.6075 high is a roughly 4% move, but a push toward 0.6122 and beyond is realistic over the next several months if the broader USD softening theme takes hold alongside the first RBNZ rate hike, which the July meeting has made entirely plausible.
The CAD Divergence: Why Canada Is the Odd Currency Out
Although I see dollar weakness filtering into the market, I actually prefer to play for cross in which I sell the Canadian dollar against these three currencies. USD/CAD is currently trading at 1.3970, so the Canadian dollar is already showing some signs of weakness against the U.S. dollar, but I am not so sure that the Canadian dollar is set to recover much. Understanding why the Canadian dollar is excluded from this trade, and why it belongs on the short side of the crosses is as important as understanding why the other three are included. The CAD story is not simply “USD weakness lifts all majors.” It is a case where multiple distinct headwinds converge to make CAD potentially the weakest link in the G10 commodity currency space.
The Oil Problem
Canada exports approximately 4 million barrels of oil per day, making crude the single largest driver of its terms of trade. The Strait of Hormuz reopening and the return of Iranian oil to global markets is unambiguously bearish for crude prices. At a minimum, I expect there to be a cap on oil prices over the coming months, even though the downside price of oil is unlikely to be as large as many consumers might like. The supply disruption premium embedded in WTI and Brent since February is now unwinding, and with it goes one of CAD’s primary supports.
This is the sharpest distinction between the CAD and the Aussie and Kiwi. For Australia and New Zealand, lower oil prices are a net positive. They reduce input cost inflation and improve growth prospects across Asia, supporting demand for Australian iron ore, coal, and agricultural exports. For Canada, lower oil prices directly erode export revenues, government royalty income, and business investment in the energy sector. The same macro event that is bullish for AUD and NZD is bearish for CAD. Of course, it is yet another reason that the dollar is likely to soften against the AUD, NZD, and EUR, since the U.S. has been exporting large quantities of oil to compensate for the reduced supplies that resulted from the Strait of Hormuz closure
The Bank of Canada Is Paralyzed -- and Leaning Toward Cuts
While the RBNZ is debating how fast to hike and the ECB just delivered its first hike in three years, the Bank of Canada is in a fundamentally different position. The BoC held rates at 2.25% at its June 10 meeting just four days ago, explicitly acknowledging in its statement that “economic activity in Canada has been weak and uncertainty about US trade policy persists.” That language, straight from the Governing Council’s own press release, is not the language of a central bank preparing to tighten.
The macro numbers tell the story clearly. Canadian GDP contracted in Q1 2026, showing negative growth for the first time in over five years. Core inflation has dropped to around 2.1%, effectively reaching the BoC’s target. Unemployment remains elevated at 6.6%. This is an economy that, absent the energy price shock, would already be receiving additional rate cuts. With the energy shock now reversing courtesy of today’s Iran deal, the remaining argument against easing evaporates.
The most likely BoC trajectory over the next two months: hold in July while absorbing the deal’s implications, then shift guidance toward cuts if Canadian economic data continues to disappoint. That is the polar opposite of the ECB’s trajectory and a stark contrast to the RBNZ’s explicit hiking bias.
The US Spillover Effect
Canada is uniquely vulnerable to US economic weakness in a way that AUD and NZD are not. Roughly 75% of Canadian exports go to the United States. When the US economy softens, and the Fed's pivot towards cut implies its is softening, Canada catches that cold directly and immediately. Lower US demand for Canadian goods, combined with ongoing US trade policy uncertainty that the BoC itself cited as a key risk, acts as a structural drag that has no equivalent for Australia or New Zealand, whose trade is more diversified toward Asia.
The Divergence Trade
The practical expression of the CAD underperformance thesis is not simply to be long USD/CAD as that would conflict with the broader USD weakness theme. The cleaner expression is through the crosses:
• AUD/CAD: Long AUD, short CAD — captures both the commodity currency divergence (oil down hurts CAD, doesn’t hurt AUD) and the rate differential (RBA steady, BoC at risk of cuts). Current level is .9872
• NZD/CAD: Long NZD, short CAD — the most asymmetric of the three, given the RBNZ’s explicit hiking posture against the BoC’s effectively neutral-to-dovish stance. Current level is .8160.
• EUR/CAD: Long EUR, short CAD — captures the rate differential story most purely, with the ECB hiking and the BoC on hold with cutting bias. Current level is 1.6220
These cross trades allow expression of the full thesis; USD weakness, commodity currency divergence, and central bank policy divergence, without taking on a simple long-dollar Canada position that would conflict with the primary view.
The Two-Month Scenario: What Needs to Happen
For this trade to work as described, the following sequence needs to unfold over roughly June–August 2026:
Near-term (weeks 1–2): Oil prices fall as Hormuz reopens and Iranian supply returns. Risk appetite improves globally. AUD and NZD recover from their technical support zones as the risk-off bid for dollars reverses. EUR/USD stabilizes above 1.1560 and begins recovering.
Medium-term (weeks 3–6): The Fed begins signaling more clearly that rate cuts are back on the table. US inflation data softens as energy prices fall through the system. Warsh leans into the easing narrative. USD selling broadens beyond the initial risk-on reaction.
Into August: ECB follows through with the September hike that markets are already pricing, cementing the rate differential story for EUR/USD. AUD and NZD continue to benefit from improved China growth expectations and commodity demand. CAD visibly underperforms as oil settles lower and BoC stays dovish.
Key Risks to Monitor
The deal unravels. This is a 60-day interim arrangement, not a permanent peace. Nuclear talks during the 60-day window could collapse, oil could spike again, and the entire framework reverses. This is the primary tail risk and argues for defined-risk positions rather than naked spot exposure.
ECB pivots on oil. If the fall in energy prices prompts the ECB to reconsider the September hike, EUR/USD loses its rate differential engine, and the move becomes more modest and fragile.
China disappoints. AUD and NZD are leveraged to Chinese growth expectations. If Chinese data continues to weaken despite the improvement in global risk appetite, the commodity currency rally could stall.
USD safe-haven demand returns. If the deal’s announcement triggers unintended geopolitical consequences such as Israeli escalation, domestic Iranian instability, or renewed Middle East tensions on other fronts, then the risk aversion could return quickly, reversing the initial move.
Conclusion
I recognize these risks as real, but I am very comfortable with them as I believe the upside in these crosses is well worth it. If things play out as expected, then I see an immediate rise in the crosses that could potentially develop into major, sustained moves. The NZD/CAD play is in certain ways the most intriguing because it has weakened so dramatically over the past few years. Its post-Covid high was .9330, and its prior high post the GFC was .9930 It appears to have established very solid support around .7950, so the upside looks very interesting
The US-Iran interim deal announced yesterday is the macro pivot point that unlocks compelling two-month trades against the US dollar overall, but also against the CAD. Please note that these trades move at a much, much slow pace than I might prefer. Still, the patience can be very rewarding. This newsletter has helped its readers earn significant profits in EUR/CAD in the past, so hopefully we can have a repeat now.
In the interim, I want wish you all the best of luck with your trading as you navigate these unusual markets.
Andy Krieger
This document is for research and informational purposes only and does not constitute investment advice.
From Imre Gams
My Framework
I treat markets as auctions, not prediction machines.
Most sessions on a day-to-day basis are balanced.
Edges form at the extremes of value.
I trade acceptance and rejection at those edges.
If value migrates, I align with it.
If it fails, I trade the rotation.
I am not in the business of forecasting.
I am in the business of validating participation.
_________________________________________________________
The control zone delivered again. The week opened with a pullback straight into it — sellers seized the moment and drove price down to the first downside target zone of 7278 to 7300.
Sellers pushed for the second target. Buyers had other ideas. A strong response lifted the market back into the control zone by the close of the week.
That's where we sit heading into this week. Right back in the middle of it.
Build acceptance above 7423 to 7485 and the upside targets come back into play — 7518 to 7549 first, then 7629 to 7639, and beyond that 7672 to 7694.
Fail to hold the zone and last week's downside targets return — 7278 to 7300 first, then 7184 to 7209.
The control zone has now defined both direction and opportunity for two weeks running.
Last week started below the 4411 control level and didn't look back. Every cited downside target was reached — 4259 first, then 4107. The move was clean and decisive.
That kind of sustained selling shifts the parameters lower.
The new control level is 4259. Above it, buyers target 4411 first, then the zone spanning 4536 to 4586. Below it, 4107 becomes the first downside target, with the next zone coming in at 3958 to 3962.
Gold has now taken out every support level cited over the past month. The burden remains on buyers to reclaim ground — starting with 4259.
Sellers stayed in control all week. The $94 to $97 zone held as a ceiling all week and price was driven into the $86 to $88 support zone.
Buyers mounted a response. Sellers stuffed it.
The week closed below $86 to $88. That zone has now flipped — from support to control zone.
Below it, $80 is the next downside target.
Above it, the first upside objective is the $94 to $97 zone. Reclaim that and the ladder opens back up — $102.52, then $104.85 to $107.30, then $110 to $112.
Sellers are in control. Buyers need to reclaim $86 to $88 to change that.