Risk assets opened the week with modest gains as investors reacted to signs of U.S.-Iran de-escalation. OCBC noted that markets may be hesitant to aggressively fade the geopolitical premium, particularly amid thin holiday trading volumes. The cautious optimism reflects hopes that tensions in the Middle East could ease without further military escalation.

However, foreign exchange markets showed restraint despite the improved risk sentiment. OCBC highlighted that uncertainty surrounding Iran's nuclear program and uranium enrichment capabilities could limit dollar weakness. High-beta currencies including the Australian dollar, Korean won, and Taiwan dollar appeared positioned for gains, while emerging market currencies like the Indian rupee, Indonesian rupiah, and Philippine peso may underperform.

Oil prices remain the critical variable driving market direction. A confirmed diplomatic deal coupled with weaker crude could pressure yields and the U.S. dollar, creating a complex interplay between energy markets and traditional safe-haven assets. Market participants are weighing multiple scenarios as the week progresses, with risk appetite likely to remain sensitive to any developments in U.S.-Iran negotiations.