USD Steady, Equities Dip as US-Iran Crisis Elevates Market Caution

The US dollar held steady during the European session as markets adopted a cautious stance amid escalating US-Iran tensions, with Iran's army warning that continued US attacks could spread the conflict to new areas. US equity futures traded mixed ahead of the Wall Street open, while oil prices remained skewed to the upside, adding pressure to risk-sensitive currencies. In central bank developments, the SNB meeting minutes revealed that inflation pressures remain virtually unchanged and monetary conditions are deemed appropriate, keeping EUR/CHF relatively stable. The Bank of England's Breeden noted the UK is in a 'good place' to monitor developments, while UK GDP data showed marginal growth in May driven by a services sector bounce. The Eurozone trade deficit widened significantly to -€7.8 billion, weighing on EUR sentiment. With geopolitical risks elevated heading into the weekend, traders are likely to maintain defensive positioning, favoring safe-haven assets including the dollar and Swiss franc over higher-beta currencies.