US-Iran agreement preparations progress, but Israeli officials remain deeply dissatisfiedLower oil prices reflect confidence in the deal, but risk assets fail to rally muchFocus on Fed Chair Warsh’s first meeting; could he upset expectations?Dollar/yen trades above 160; BoJ officials on edge about another interventionUS, Iran Prepare for the Signing CeremonyWhile the preparations for Friday’s signing ceremony in Switzerland are continuing, additional details of the agreement have emerged. The key ones appear to be that Iran will be given a temporary green light to sell oil, adding a significant headwind to energy prices, while a $300bn reconstruction and development fund for Iran is in the works. Obviously, these two advances are dependent on a permanent agreement that successfully addresses Iran’s nuclear programme and the current stockpile of enriched uranium.Meanwhile, the Israeli leadership remains vocally dissatisfied with the latest newsflow. Iranians are trying to tie the agreement to the Israeli military operations in Lebanon, but, in the end, they might have to settle for a pledge from Trump for help in solving this difficult jigsaw, without endangering the agreement.Despite the decent risk of last-minute drama, oil prices are continuing their journey lower. The WTI oil cash price has dropped to the lowest level since early March, around 36% below the peak, surrendering the biggest chunk of the geopolitical premium. However, the December WTI oil futures contract is hovering at $72, near mid-April levels, and thus signaling that the normalization of oil supply routes could take much longer than currently touted by major investment houses.Interestingly, despite the positive newsflow and the lower oil prices effectively boosting the global economy, following Monday’s positive gaps higher, risk markets are trading sideways, mostly mimicking the dollar’s performance. One would have expected a more forceful move higher, which is the typical reaction from equity investors to risk-positive developments.This sideways trading is also confirmed by the one-month implied volatility of the S&P 500 index hovering near this year’s lows, fully erasing the recent peaks. However, this odd calmness is potentially connected to today’s key event.Could Warsh Steer the Committee?The focus is firmly on today’s Fed meeting. Despite the chances of a rate move being virtually nil, the gathering could prove eventful as investors are preparing for Kevin Warsh’s first meeting as the new Fed Chair. Since he has strategically avoided speaking publicly since being sworn into office, the importance of Wednesday’s press conference has risen significantly.Warsh is expected to highlight the strategic changes he plans to make – including fresh inflation indicators, a smaller balance sheet and tighter inflation targeting – to counter pressure from the most hawkish members of the FOMC. His favorite trimmed mean PCE inflation rate, compiled by the Dallas Fed, was just 2.3% in April, compared to the ballooning CPI and PCE rates and the inflated price indicators from various surveys.Convincing the FOMC to tone down the rhetoric might have proven a herculean task for Warsh, but he has been given a significant lifeline from the Middle East agreement and the downward move in oil prices. Interestingly, the usual economic projections and the famous dot plot might prove out-of-date, further supporting Warsh’s inclination to remove forward guidance.That said, the dot and the staff projections could muffle the most likely balanced rhetoric from the new Fed Chair. The dollar could benefit from a hawkish stance, though a negative reaction in equity markets could limit gains. On the flip side, a more balanced Fed message and reduced emphasis on forward guidance, could weaken the dollar. In that scenario, euro/dollar may extend its recent recovery, although the lack of strong euro-specific catalysts could limit upside momentum.Both Yen and Pound in Murky WatersFinally, the weaker-than-expected May CPI out of the UK did little to favour the pound, potentially opening the door to a balanced meeting tomorrow, although the BoE’s stance will heavily depend on tonight’s Fed meeting. Meanwhile, dollar/yen is trying to edge below 160, though today’s action could be considered pre-Fed meeting positioning. BoJ officials are on their toes, potentially ready to intervene overnight if the Fed meeting triggers an upside dollar move.