Forex Today: Cautious start to week as markets assess latest on US-Iran conflict

Here is what you need to know on Monday, June 29:

Financial markets adopt a cautious stance at the beginning of the week as investors evaluate the latest developments surrounding the conflict between the United States (US) and Iran. The European economic calendar will feature business and consumer sentiment data for June. Later in the day, European Central Bank (ECB) President Christine Lagarde will deliver an intorudctory speech at ECB Forum on Central Banking.

The US and Iran exchanged fire near the Strait of Hormuz over the weekend. Iran's Islamic Revolutionary Guard Corps (IRGC) said it targeted US military sites in neighboring countries, including Kuwait and Bahrain, after the US struck Iranian sites. Meanwhile, Iran demanded a full withdrawal of Israeli Forces from Lebanon as part of a final agreement with the US. A US official said on Sunday that the US and Iran will stand down on strikes and allow vessels to move freely. The official further noted that technical talks with Iran are set to conntinue on all areas of the Memorandum of Understanding. According to Axios, sides will meet in Doha on Tuesday for the next round of negotiations.

After closing the previous week in positive territory, the US Dollar (USD) Index holds steady above 101.00 in the European session on Monday, while US stock index futures cling to moderate gains.

Reserve Bank of Australia (RBA) Assistant Governor Chris Kent said during a review of alternative monetary policy tools that the central bank will be better prepared to respond to the next crisis it faces. "The cash rate target remains our primary and preferred instrument," Kent added. These comments failed to trigger a noticeable market reaction and AUD/USD was last seen trading little changed on the day at around 0.6900.

EUR/USD trades marginally higher on the day near 1.1400 in the European morning on Monday.

GBP/USD recovers modestly to start the week and holds above 1.3200. The Bank of England will publish Consumer Credit data for May later in the session.

Gold struggles to extend its recovery and retreats toward $4,050 after posting two consecutive days of gains to end the previous week.

USD/JPY trades in a tight channel at around 161.80 in the European morning on Monday. The data from Japan showed earlier in the day that Retail Trade expanded by 5.3% on a yearly basis in May, surpassing the market expectation of 3.2%.